UNITED NATIONS, New York (CMC) – The United Nations Conference on Trade and Development (UNCTAD) said, foreign direct investment (FDI) to the Caribbean “faltered” in 2015.
In its latest Global Investment Trends Monitor, the UN agency said that flows” also “faltered” in Africa and Latin America.
The Monitor said, the “falter” in the Caribbean excludes offshore financial centres, “reflecting the plummeting prices of their principal commodities exports”.
It said FDI in transition economies also “faltered,” slipping by 54 per cent amid plummeting commodity prices and regional conflicts.
Globally, however, UNCTAD said FDI flows rose by 36 per cent in 2015, reaching their highest levels since the financial crisis.
UNCTAD said that foreign investment totaled some US$1.7 trillion and that increased FDI – investment made by a company or entity based in one country, into a company or entity based in another country – in developed countries was the main factor behind the unexpected spike.
UNCTAD said industrialized nations accounted for 55 per cent of global FDI inflows last year.
Strong growth in flows was reported in the European Union (EU), as well as in the United States, where FDI quadrupled, although from a historically low level in 2014, UNCTAD said.
According to the report, other developing economies, besides the Caribbean, saw their FDI reaching a new high of US$741 billion, five per cent higher than in 2014.
Looking ahead, however, UNCTAD warned that, barring another wave of merger and acquisition deals and corporate reconfigurations, FDI flows are expected to decline in 2016.
UNCTAD said this would reflect the fragility of the global economy, volatility of global financial markets, weak aggregate demand and “a significant deceleration in some large emerging market economies.”
“Elevated geopolitical risks and regional tensions could further amplify these economic challenges,” the report said.
It added that stagnant greenfield investment globally and outright declines in a number of developing regions suggest that the current upswing in global FDI flows is “potentially fragile and exposed to the vagaries of the cross border merger and acquisitions market”.