World Business

UN predicts modest increase in FDI for Q1

(Xinhua)
Updated: 2010-04-27 10:20

GENEVA: The United Nations predicted a modest increase in foreign direct investment (FDI) for the first quarter of 2010 in a report released on Monday.

"There was a slight increase, but another rebound? I wouldn't say so," Supachai Pantichpakdi, the United Nations Conference on Trade and Development (UNCTAD) secretary-general, said in a briefing here.

The UNCTAD's Global Investment Trends Monitor showed that on average, quarterly FDI inflows remained stable throughout the last three quarters of 2009, but are expected to increase slightly in 2010. This is partly due to a doubling of the value of cross- border mergers and acquisitions from less than $50 billion in 2009's fourth quarter to almost $100 billion in 2010's first quarter. The slight rise in FDI is expected to increase further throughout the year.

"Generally speaking, FDI growth trails economic growth by at least two quarters. Thus, the continued growth of GDP -- which turned positive in mid-2009 -- will provide additional impetus for FDI growth in the coming quarters," the report said.

The Monitor also revealed that equity flows, the component of FDI most closely linked to real investment abroad, have remained low since the beginning of 2009. Meanwhile, greenfield projects, which have fallen since the first quarter of 2008, dropped slightly in the first quarter of 2010 after having risen in the fourth quarter of 2009.

"The message is that the major investors are still very cautious," Pantichpakdi said.

The Geneva-based UNCTAD was established in 1964 and has 193 member states.