Global foreign investment at 3-year low

GENEVA — Business investments across national borders or overseas plunged by almost a quarter in 2017, and increased trade tensions between the world’s major economies could lead to more such setbacks, the United Nations Conference on Trade and Development reported.

The release of UNCTAD’s World Investment Report 2018 comes amid geopolitical and trade tensions, financial volatility, rising interest rates in rich nations and expected weaker demand for commodities. Despite those challenges there has been continued but slowing recovery from the crisis that began with the collapse of Lehman Brothers in September 2008 and almost toppled the world’s financial system.

A day before UNCTAD’s report, the World Bank predicted global growth will slow slightly from a robust 3.1 percent in 2018 down to 3 percent in 2019 and to 2.9 percent in 2020. UNCTAD said flows of global foreign direct investment — cross-border investment among companies and individuals throughout the globe — fell by 23 percent to $1.43 trillion in 2017, down from $1.87 trillion in 2016.

The figures, it said, are “in stark contrast to other macroeconomic variables, which saw substantial improvement in 2017.”

The decline in foreign direct investment and a slowdown in global value chains, which represent the sum of what is needed to produce a good or service, should be “a major concern for policymakers worldwide, and especially in developing countries,” said UNCTAD Secretary-General Mukhisa Kituyi.

“Investment in productive assets will be needed to achieve sustainable development in the poorest countries,” he said in a statement. UNCTAD blamed some of the decline on a 22 percent decrease in the value of cross-border mergers and acquisitions.