The virus outbreak could cause global foreign direct investment (FDI) to shrink by 5%-15%. UNCTAD also projects an impact of -0,5% in the global GDP growth.
The United Nations Conference on Trade and Development (UNCTAD), estimates that Coronavirus (COVID-19) could cause global foreign direct investment (FDI) to drop down by 5%-15%, according to a report published on 8 March.
The UN trade body had projected earlier a stable level of global FDI inflows for 2020-2021 with a potential increase of 5%. Now it warns that flows may hit their lowest levels since the 2008-2009 financial crisis.
Negative demand shocks and the economic impact of supply chain disruptions -particularly in economies such as China- will affect investment prospects in many countries. “The spread of the disease and its effects will affect both economies that feed intermediate goods and services into China’s export and those that rely on inputs of intermediates from China”, said the director of InvestChile, Cristián Rodríguez.
“Foreign investment must be a priority amid the uncertainty the world is currently experiencing. One of our focuses as an agency is to foster reinvestment in the expansion of the operations of overseas companies already present in Chile. In the context in which we find ourselves, optimizing our resources and highlighting the opportunities Chile offers is paramount,” said Rodríguez.
UNCTAD projects an impact of -0,5% in the GDP growth under a scenario in which Covid-19 would be brought under control in the first half of 2020, and a potential impact of -1,5% under a scenario in which the pandemic continues to affect the global economy throughout the year.
To learn more about foreign direct investment in Chile, see this article.