OECD: Covid-19 Pandemic Drives Global Investment to 15-Year Low

Global foreign direct investment flows fell to the lowest in 15 years amid the pandemic, while China overtook the US economy as the top destination.

According to OECD data published last week, foreign direct investment (FDI) flows fell 38% to $846 billion in 2020 compared to the previous year. The Covid-19 crisis significantly contributed to the already-steady decline, causing global FDI flows to fall to the lowest levels since 2005. In fact, last year’s FDI flows accounted for approximately only 1% of the world’s GDP — the smallest since 1999.

A drop in Global FDI inflows were noted across most countries last year, crashing by 70% in the European Union “mostly due to divestments from the Netherlands and decreases that surpassed $10 billion in a number of EU countries.” Similarly, inflows to G20 economies fell 28%, while outflows declined 43%.

At the same time, China surpassed the US as the main destination for global FDI for the second time in the past six years. FDI flows into China totalled $212 billion in 2020, while the US economy reported FDI flows worth $177 billion. India and Luxembourg, where a number of legal shell companies are registered, were the next largest beneficiaries.

Information for this briefing was found via the OECD. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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