About the report-
- As per the report, indicates that foreign direct investment (FDI) recovered to pre-pandemic levels in 2021 reaching nearly $1.6 trillion but this course is unlikely to be sustained in 2022.
- Sustainability themed investment products in global financial markets rose by 63% from 2020 and governments around the world seek to develop regulatory frameworks for sustainable finance.
- It has said that in 2022 the business and investment climate has changed dramatically as the war in Ukraine results in a triple crisis of high food and fuel prices and tighter financing.
- Other factors clouding the FDI horizon include renewed pandemic impacts, the likelihood of more interest rate rises in major economies, negative sentiment in financial markets and a potential recession.
- Despite high profits, investment by multinational companies in new overseas projects were still one-fifth below pre-pandemic levels and for developing countries, the value of greenfield announcements stayed flat.
- UNCTAD foresees that the growth momentum cannot be sustained and that global FDI flows in 2022 will likely move on a downward trajectory, at best, remaining flat.
- While the recovery benefitted all regions, almost three-quarters of the growth was concentrated in developed economies as FDI flows rose 134 per cent and multinational companies posted record profits.
- Flows to developing economies rose 30 per cent to $837 billion — the highest level ever recorded — largely due to strength in Asia, a partial recovery in Latin America and the Caribbean and an upswing in Africa.
- The share of developing countries in global flows remained just above 50 per cent.
FDI inflow to India-
- According to UNCTAD, India jumped one position to 7th among the top recipients of FDI in the last calendar year (2021) despite FDI inflows into the country declining.
- FDI inflows into India declined to $45 billion in 2021 from $64 billion in the preceding year.
- Among the top 10 host economies, only India saw a decline in its inflows. However, outward FDI from India rose 43 per cent to $15.5 billion in 2021.
- Though flows into India declined to $45 billion. A flurry of new international projects were announced. The largest number of projects (23) was in renewables.
- Large projects include the construction in India of a steel and cement plant for $13.5 billion by ArcelorMittal–Nippon Steel (Japan) and the construction of a new car manufacturing facility by Suzuki Motor (Japan) for $2.4 billion.
- The United Nations Conference on Trade and Development (UNCTAD) is the UN’s leading institution dealing with trade and development.
- It is a permanent intergovernmental body established by the United Nations General Assembly in 1964.
- It is part of the UN Secretariat and has a membership of 195 countries, one of the largest in the UN system.
- It supports developing countries to access the benefits of a globalized economy more fairly and effectively.
- It provides economic and trade analysis, facilitates consensus-building and offer technical assistance to help developing countries use trade, investment, finance and technology for inclusive and sustainable development.