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FT - Worldwide FDI hits record
$1,500bn in spite of turmoil
By Frances Williams in Geneva
Worldwide foreign direct investment surged
to a record $1,500bn last year, surpassing the previous
peak of $1,400bn in 2000, according
to preliminary United Nations figures.
The UN Conference on Trade and Development
said in its report released yesterday that financial
turmoil in the second half of last year had not hit
overall FDI flows, although the outlook for 2008 was
more uncertain.
Dollar weakness might have encouraged
inward investment to the US, the largest recipient attracting
an estimated $193bn (€131bn, £98bn), as companies
and other investors with funds in appreciating currencies
snapped up cheap US assets.
Rich and poor countries alike saw strong
growth in FDI in 2007, with two-thirds going to industrialised
nations and the rest to developing and "transition"
countries such as Russia. Foreign investment in Russia,
propelled by its booming energy sector, jumped 70 per
cent last year to nearly $50bn.
Unctad said the growth in FDI reflected
strong economic performance in many parts of the world
and buoyant cross-border mergers and acquisitions activity
fuelled by high corporate profits and an abundance of
cash for purchases.
However, the value of M&As declined
in the second half of 2007 following the summer's credit
squeeze. Various downside risks for the world economy
could affect prospects for 2008, Unctad warned. "Continuing
global external imbalances, sharp exchange rate fluctuations,
rising interest rates and increasing inflationary pressures,
as well as high and volatile commodity prices, pose
risks that may have a chilling effect on global FDI
flows."
After the US, the UK was the second biggest
host to new foreign investment last year with FDI inflows
of $171bn, followed by France at $123bn. The European
Union was the largest host region, accounting for 40
per cent of all inflows in 2007.
FDI flows to China, still the biggest
recipient among developing countries, de-clined slightly
from $69bn in 2006 to $67bn.
Copyright The Financial Times Limited
2008
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