Foreign Direct Investment Increased by 3% in 2023 with Seaports among Major Beneficiaries
In a positive turn of economic forecasting, global foreign direct investment (FDI) saw an increase of 3% in 2023. This uplift, as noted by the United Nations Conference on Trade and Development (UNCTAD), is primarily attributed to a diminished apprehension regarding a potential recession. The maritime industry, in particular, witnessed notable investment activities, significantly in the Oil & Gas sector, seafood production, tourism, maritime transport, and ports. Despite the overall positive trend, the offshore wind energy sector experienced a setback with unexpected contract withdrawals, a departure from the generally optimistic trend in maritime investments.
The latest analysis from UNCTAD has revealed that global FDI trends in 2023 have surpassed the prior forecasts made early in the year. An estimated increase to USD 1.37 trillion globally was recorded, marking a 3% growth. This expansion was largely fueled by several key European economies that often play a pivotal role as intermediaries for directing FDI towards other nations. However, the report from UNCTAD also sheds light on a concerning decrease. When the influence of these intermediary European economies is discounted, global FDI flows actually reveal a sharp reduction of 18% for the year. Specifically, the report details a 23% downturn within the rest of the European Union and a 3% decline in the United States, the leading recipient of FDI globally.
A notable downturn was observed in the arena of international investment projects, particularly in aspects relating to financing for mergers and acquisitions, which plummeted by 21% and 16% respectively. Nevertheless, there was a silver lining as the announcements of greenfield projects, while decreasing in volume by 6%, actually increased in value by the same margin. The report cautiously presents a modest increase in FDI flows as a possibility for 2024, supported by an anticipated stabilization of inflation and reduced borrowing costs. However, it also warns of significant risks such as geopolitical tensions and the increasing debt burden of many countries, alongside concerns of a further fragmentation within the global economy.
Developing nations, often considered engines of FDI growth, witnessed a 9% contraction in investment, summing up to USD 841 billion. Particularly, developing Asian countries experienced a striking 12% decrease in FDI. China’s FDI inflows declined by 6%, although it did see an 8% rise in new greenfield project announcements. India faced a substantial 47% reduction in FDI inflows but maintained its position among the top five global destinations for greenfield projects. The ASEAN region, previously a hotspot for dynamic investment growth, recorded a 16% fall in FDI. Yet, this region continued to attract manufacturing investment, with a significant 37% increase in greenfield project inquiries, indicating the potential for growth in countries like Vietnam, Thailand, Indonesia, Malaysia, the Philippines, and Cambodia. In contrast, Africa saw only a slight 1% drop in FDI inflows, and Latin America and the Caribbean experienced stable FDI levels. Notably, Mexico, the second-largest economy in its region, enjoyed a 21% boost in FDI.
This comprehensive analysis showcases an intriguing panorama of FDI flows in 2023, highlighting the resilience and shifting dynamics of the global investment landscape, with special attention to the promising prospects in the maritime sector.
