FDI Flows to Reduce by 5-15% in 2020: UNCTAD

According to UNCTAD, could decline by anywhere between 5% and 15% from the earlier estimates on account of the coronavirus outbreak.

FDI Flows to Reduce by 5-15% in 2020: UNCTAD

According to a recent report by UN Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) could decline by anywhere between 5% and 15% from the earlier estimates on account of the coronavirus outbreak. The figures are expected to increase only slightly next year.

Several companies among leading 100 MNCs tracked by the UN trade body have already indicated a reduction in capital expenditure in affected countries, and 41 companies have warned that their profits could decline as a result of the virus.

Consumer-facing companies are expected to see a big hit to their earnings driven by a slowdown in demand, even as they experience risks of supply chain disruptions and production challenges due to the outbreak. Among the top 5,000 listed companies, earnings for this year are expected to come in 9% lower.

The worst hit sectors include automotives, airlines and energy companies. Earlier this year, before the coronavirus concerns, UNCTAD had forecast FDI flows to rise by 5% in 2020 from around $1.39 trillion in 2019. However, the coronavirus outbreak could cause FDI flows to fall to the lowest level seen since the 2008-09 financial crisis.

ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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