According to the released Investment Report 2021 of United Nations Conference on Trade and Development (UNCTAD), US is top of FDI destination with US$ 156 billion, followed by China with US$ 149 billion and the 3rd is Hong Kong with US$ 119 billion, etc.
Vietnam is on the 19th position with US$ 16 billion in 2020 which is 5 steps upward compared to 2019 while Japan is ranked 20th with US$ 10 billion.
The report also showed that global FDI inflows in 2020 decreased 35%, from US$1.5 trillion in 2019 to US$1 trillion. This is the lowest rate since 2005 and nearly 20% lower than the bottom rate in 2009 during the global financial crisis. The globally closure of borders in response to Covid-19 pandemic has also delayed the existing investment projects and the possibility of a recession that causes multinational corporations to reevaluate new projects.
Notably, the profits of multinational corporations decreased by an average of 36% and the reinvested income of foreign joint ventures, an important part of FDI inflows in previous years, decreased accordingly. UNCTAD said the decline in FDI actually happens clearer in developed economies, where FDI inflows have decreased by 58%, partly due to corporate restructuring and stable financial flows. Meanwhile, FDI in developing economies decreased less than 8%, mainly due to the flexible transition in Asia.
Overall, developing economies account for 2/3 of total global FDI, increased nearly 1/2 compared to 2019. In terms of regions, FDI inflows declined around the world except for Asia. FDI inflows to Europe decreased by 80%, North America by 40%, Latin America and the Caribbean by 45% and Africa by 16%. Meanwhile, FDI inflows to Asia increased by 4%, helping Asia account for half of total global FDI in 2020.
UNCTAD predicts that global FDI inflows will reach to bottom in 2021 and partially recover with an increase of about 10 or 15%. This leaves FDI inflows about 25% lower than 2019 rate and more than 40% compared to the peak in 2016. The relatively modest recovery in global FDI in 2021 reflects the difficulty in vaccine access, the emergence of virus variants and delays in the reopening of economic sectors.
Current predictions suggest a higher increase in FDI in 2022 and might bring FDI back to 2019 rate of US$1.5 trillion. In addition, FDI attraction will be different. Developed economies are expected to drive global FDI inflows with growth projected at 15% in 2021, both due to strong cross-border mergers and acquisitions and supportive large-scale public investment.
Besides, FDI inflows into Asia will still recover as the region remains an attractive destination for international investment during the progress of Covid-19. The report also indicates a significant recovery of FDI into Africa, Latin America and the Caribbean in the near future.
