UN Predicts 40% Plunge in Global Foreign Investment Because of Virus

The UN made a statement on Tuesday saying that global foreign direct investment will likely fall 40% this year due to the Covid-19 pandemic, with even worse to come in 2021.

FDI, a measure used to describe cross-border private sector investments, is predicted to shrink from $1.54 trillion in 2019 to below $1 trillion for the first time since 2005, according to the United Nations Conference on Trade and Development (UNCTAD) in its 2020 World Investment Report.

The report also forecasted a further decrease in FDI in 2021 by 5% to 10% in 2021, and may start to recover in 2022.

UNCTAD secretary-general Mukhisa Kituyi said that “the global economy is in a direr situation than it was during the 2008 financial crisis.”

Kituyi said the economic impact of Covid-19 would hit developing countries hard, disrupting major productive sectors and industries, instigating the fall of the global tourist industry, and contracting world trade.

Kituyi added that “the shock will be further compounded by the impact on food security as production of major food items is concentrated in a few big countries where the pandemic is expanding,” and that “managing the disease is only part of the persistent challenges facing developing economies.”