世界发展银行-FDI-Watch---Quarterly-Report,-Issue-3,-June-2021_32页_721kb

FDI Quarterly Report Summary - Issue 3, June 2021

Core Content Overview

This report provides an analysis of global and regional trends in foreign direct investment (FDI) for Q4 2020 and Q1 2021, focusing on FDI inflows, greenfield investments, cross-border mergers and acquisitions (M&A), investor sentiment, and policy changes.

Global FDI Trends

• Total FDI Inflows: Global FDI inflows increased slightly in Q4 2020 by 2 percent YoY to $293 billion, driven mainly by high-income countries like the US and Germany. However, FDI inflows to developing countries fell by 6 percent YoY to $130 billion.
• Greenfield FDI: Greenfield FDI announcements in developing countries declined by 31 percent YoY in Q1 2021, a slight improvement from the 54 percent drop in Q4 2020. The global decline was 25 percent YoY.
• M&A Activity: Cross-border M&A rebounded globally, increasing 112 percent YoY to $463 billion in Q1 2021. Developing countries saw a 41 percent YoY increase, though still below historical averages.
• Sectoral Trends:
  • Sectors like hospitality and chemicals saw significant declines (77% and 68% YoY respectively).
  • IT services and utilities also declined, possibly due to reversion to the mean after strong performance.
  • Manufacturing sectors, such as automotive and construction, showed less severe declines, suggesting a potential rebound.
• Investor Sentiment:
  • 93% of surveyed MNE affiliates in developing countries reported adverse impacts from the pandemic in Q1 2021.
  • Despite some improvement, 68% of firms were still operating below pre-COVID capacity.
• Policy Changes:
  • Most new FDI restrictions were introduced in developed countries, particularly in national security and healthcare sectors.
  • Developing countries saw a mix of liberalizing and restricting measures.

Regional FDI Trends

East Asia and Pacific

• Total FDI Inflows: Rebounded in Q4 2020 by 15% YoY to $88 billion, led by China's $86 billion inflows.
• Greenfield FDI: Declined by 28% YoY in Q1 2021 to $18 billion, with China accounting for $12 billion (up 16% YoY).
• M&A Activity: Cross-border M&A into the region increased 16% YoY to $12.3 billion, with China receiving $10 billion (43% YoY increase).
• Investor Sentiment: 99% of surveyed MNE affiliates reported adverse impacts, though some signs of improvement were noted.
• Policy Changes:
  • China eased restrictions on foreign investment in life insurance and introduced a positive list.
  • Indonesia introduced restrictions on foreign capital ownership in payment services.

Europe and Central Asia

• Total FDI Inflows: Declined by 37% YoY in Q4 2020 to $9.8 billion, led by Russia’s $4 billion inflows.
• Greenfield FDI: Declined by 51% YoY in Q1 2021 to $4 billion, with significant drops in auto manufacturing, utilities, and retail.
• M&A Activity: Cross-border M&A declined by 33% YoY in Q1 2021 to $2.4 billion, mainly in Russia.
• Investor Sentiment: 80% of MNE affiliates reported adverse impacts, though some indicators showed improvement.
• Policy Changes: No new FDI-related measures were introduced in Q1 2021.

Latin America and Caribbean

• Total FDI Inflows: Declined by 72% YoY in Q4 2020 to $8.4 billion, with Brazil’s inflows down 80% YoY.
• Greenfield FDI: Increased by 9% YoY in Q1 2021 to $21 billion, led by Brazil’s $12 billion in greenfield projects.
• M&A Activity: Cross-border M&A increased by 328% YoY in Q1 2021 to $15.7 billion, driven by high-profile deals in telecom and energy.
• Investor Sentiment: 90% of surveyed MNE affiliates reported adverse impacts, though some signs of improvement were noted.
• Policy Changes: No new FDI-related measures were introduced in Q1 2021.

Middle East and North Africa

• Total FDI Inflows: Rebounded by 2,778% YoY in Q4 2020 to $3 billion, mainly due to Qatar and Morocco.
• Greenfield FDI: Declined by 54% YoY in Q1 2021 to $6 billion, with significant drops in major economies like Saudi Arabia and UAE.
• M&A Activity: Cross-border M&A into the region contracted by 39% YoY to $5 billion, with Saudi Arabia seeing a 98% decline.
• Investor Sentiment: All surveyed firms reported adverse impacts, with no significant improvement noted.
• Policy Changes: No new FDI-related measures were introduced in Q1 2021.

South Asia

• Total FDI Inflows: Increased by 44% YoY in Q4 2020 to $21 billion, mainly driven by India’s $20 billion inflows.
• Greenfield FDI: Declined by 73% YoY in Q1 2021 to $3.3 billion, with India accounting for most of the decline.
• M&A Activity: Cross-border M&A increased slightly by 1% YoY to $6.8 billion, mainly in India.
• Investor Sentiment: 93% of surveyed firms reported adverse impacts, with 68% still operating below pre-COVID capacity.
• Policy Changes: Limited new policy activity in Q1 2021, with a mix of liberalizing and restricting measures.

Key Takeaways

• The global FDI recovery in Q4 2020 was uneven, with developed countries and China leading the way.
• Greenfield FDI in developing countries improved slightly in Q1 2021, reflecting vaccine rollouts and increased investor optimism.
• Cross-border M&A rebounded globally, but not to the levels predicted by some analysts.
• Investor sentiment remained weak in many developing regions, with most firms still affected by the pandemic.
• Policy changes were mostly limited to developed countries, while developing countries introduced a mix of liberalizing and restricting measures.