UNCTAD forecasts drop of between 30% and 40% in FDI globally

The organization has updated its forecasts about the impact of Covid-19 on global FDI flows. It was previously forecasting a reduction between 5% and 15%.

The United Nations Conference on Trade and Development (UNCTAD) has updated its forecasts about the impact of the Covid-19 pandemic on global foreign direct investment (FDI) flows and now anticipates that there could be a drop of between 30% and 40% in 2020, a trend that would persist into 2021.

In its previous report, UNCTAD forecast a drop of between 5% and 15%, due to the spread of coronavirus, its economic impact and downward revisions of the earnings of the largest multinational companies.

UNCTAD explained that forecasts of the expected economic impact of Covid-19 “are becoming more serious by the day”. Early expectations that the impact would be felt primarily through production stoppages and supply chain disruptions in East Asia and, particularly, China, affecting economies that are closely integrated into global value chains, are being overtaken by events, it indicated.

“It is now evident that pandemic mitigation efforts and lockdowns around the world will have devastating effects on all economies, independent of their links to global supply networks,” the report stated.

“The economic situation is complicated at the global level, where activity in general will slow and that will have an impact on foreign investment in our country. At InvestChile, we are working to minimize this impact and foster reinvestment by the overseas companies that are already in the country so as to reactivate the economy once the current emergency has passed,” said the director of InvestChile, Cristián Rodríguez.