As Covid-19 continues to ravage global economies, there is no doubt foreign direct investment (FDI) will be impacted negatively.
The only question is the degree of the decline. On 9 March, the UN Conference on Trade and Development (Unctad) estimated that global FDI flows would shrink by between 5% and 15% during 2020 and 2021.
In just under a month, that estimate had been changed to an alarming 30% to 40%. “The outbreak and spread of Covid-19 will cause a dramatic drop in global FDI flows,” says James Zhan, director of investment and enterprise at Unctad.
As a result of the economic uncertainty unleashed by the global pandemic, multinational enterprises (MNEs) are restricting capital expenditures, directly hitting FDI flows.