Foreign investment looks down on economic prospects

[Ta Kung Pao] according to a report released by the United Nations Conference on Trade and development on the 24th, global foreign direct investment (FDI) will drop sharply in 2020, Reuters and the Guardian reported. In the UK, hit by the epidemic and brexit, FDI fell by more than 100% last year, from US $45 billion in 2019 to US $1.3 billion. UK’s new FDI inflow will be zero in 2020.

Foreign direct investment refers to multinational companies building new factories, expanding business, or acquiring local companies in a country. At the end of 2020, the global FDI level will shrink by 42%, which is more than 30% lower than the bottom after the global financial crisis in 2009, and will fall back to the level of the 1990s. The United Nations also warned that related investment may experience a U-shaped recovery, which may continue to be weak in 2021, and the real recovery may start in 2022.

The report shows that FDI in many western developed countries has dropped by more than 50%. In the UK and Italy, foreign capital inflows plunged more than 100% last year as COVID-19 continued to tumbled. However, the overall FDI of the European Union declined by 71%, and even Germany, which is relatively stable in epidemic prevention, lost more than 60% of its funds.

Apart from the impact of the epidemic on the economy, the situation of brexit has also hit the confidence of foreign investors in the UK. Many large factories, including Ford, the US automobile manufacturer, have left. Since the United Kingdom’s complete brexit on New Year’s day, its foreign trade enterprises have to fill in a large number of customs clearance documents when exporting goods to Europe. Some trade officials even privately suggested that enterprises set up companies in the EU to avoid relevant procedures and taxes.

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