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Investment in Africa expected to fall in ‘09
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In case we needed further evidence of the tough times ahead for the world’s poorest countries, the United Nations Conference on Trade and Development (UNCTAD) released their 2009 World Investment Report last week demonstrating that foreign direct investment (FDI) around the world has been significantly affected by the global economic crisis. Global investment is essential for economic recovery and sustained growth, meaning the lack of foreign direct investment could indicate a slower and weaker economic turnaround and more obstacles for developing countries.
The report found that in the short run, global foreign direct investment is expected to be low. After peaking at $1.98 trillion in 2007, global FDI inflows having been falling since and preliminary data for the first quarter of 2009 shows that inflows fell by 44 percent compared to the same period last year. By the end of 2009, global inflows are expected to fall to below $1.2 billion. Medium-term prospects are slightly more optimistic and gradual recovery is predicted in 2010. However, growth will only significantly accelerate in 2011.
In sub-Saharan Africa, despite an increase in FDI inflows from $44.38 billion in 2007 to about $63.65 billion in 2008, initial data indicates that FDI inflows to every sub-Saharan region except Southern Africa will decrease in 2009, a significant change after five years of consistent growth.
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