Foreign direct investment (FDI) fell by 2% in 2023 for the second consecutive year under the triple effect of an economic slowdown coupled with increasing trade and geopolitical tensions, UN Trade and Development (UNCTAD) revealed on Thursday.
This slight drop in FDI, to reach 1,300 billion dollars worldwide, in fact hides a more marked decline of 10% if we exclude a few exceptional situations in European countries, underlines the annual report of the UN agency .
UNCTAD experts cite easing financial conditions and concerted efforts toward investment facilitation as “an important feature of national policies and international agreements.”
FDI flows to developing countries fell 7% to $867 billion last year.
Developing countries in Asia saw a decline of 8%, but this masks a large increase (44% by value) in new projects.
FDI fell 3% in Africa to $53 billion, driven down by Egypt and South Africa. UNCTAD notes that “the continent has attracted a growing share of greenfield global megaprojects, with six of them valued at more than $5 billion.”
Topping the list is a green hydrogen project in Mauritania, a least developed country in northwest Africa. “This project is expected to generate $34 billion in investments, an amount several times greater than the country’s GDP,” the report notes.
In Latin America and the Caribbean, FDI fell by 1%.
For developed countries, UN Trade and Development notes the impact of implementing a global tax rate on the profits of multinational companies.
“Flows to developed countries have been strongly affected by the financial transactions of multinational companies, motivated in part” by the implementation of this tax.
Flows to most parts of Europe and North America declined by 14% and 5%, respectively.
