According to the United Nations Conference on Trade and Development (UNCTAD), negative or slow growth in many economies and further deteriorating financing conditions will put downward pressure on FDI this year.
In its most recent report on investment trends, the international organization noted that significant downward pressure on Foreign Direct Investment (FDI) is expected globally this year.
“The outlook for global FDI in 2023 appears weak, with a significant number of economies around the world expected to enter a recession”, said United Nations Conference on Trade and Development (UNCTAD) in the report.
Downward pressure on FDI
According to the organization, in addition to negative or slow growth in many economies, other factors driving downward pressure on FDI include further deteriorating financing conditions, investor uncertainty in the face of multiple crises, especially in developing countries, and increasing risks associated with debt levels.
UNCTAD noted that crises including the war in Ukraine, food and energy prices, financial turmoil, and debt pressures inevitably affected global foreign direct investment in 2022.
This directly influenced new investment project numbers, international project finance deals, and mergers and acquisitions, especially after the first quarter of 2022.
“Project finance and M&As were especially affected by deteriorating financing conditions, rising interest rates, and growing uncertainty in financial markets,” said the organization, which forecast another difficult year for global Foreign Direct Investment.
The United Nations Conference on Trade and Development (UNCTAD) is an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade.
Click here to download the full report.
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