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Saturday, January 28, 2023

Foreign Direct Investment to get hurt amid the pandemic: UN

Foreign Direct Investment( FDI) plays a crucial role to upgrade the foreign investors' trust and brings financial prosperity in host country. Pakistan, in the last couple of months, was bracing up to attract foreign investors to boost the economic activities in the country and create job opportunities. However, latest statistics published by the UN show that FDI will suffer a depreciation more than the anticipated value. In this case, what could be the strategy that Pakistan can follow?

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The global COVID-19 pandemic is now expected to take a far worse toll on foreign direct investments worldwide than feared just a few weeks ago, UN economists said Thursday.

A fresh report from the UN Conference on Trade, Investment and Development (UNCTAD) warned that the rapid spread of the coronavirus would cause a “dramatic drop” in global foreign direct investment, which is a measure of cross-border private sector investment.

It is now evident that pandemic mitigation efforts and lockdowns around the world will have devastating effects on all economies

The agency said it now believed that global FDI could be as much as 40 percent lower than its projections in January, when it had expected to see up to five percent growth this year and next.

That compares to a forecast it issued just two weeks ago, in which it said that FDI would be up to 15 percent lower than its January projections, in a worst-case scenario.

Efforts to halt the spread of the new coronavirus, which has killed nearly 22,000 people worldwide and infected more than 500,000, have wreaked havoc on international business and are rapidly pushing the world into a global recession.

“Projections of the economic impact of COVID-19 are becoming more serious by the day,” Thursday’s report said.

It said “early expectations that the impact would be felt first and foremost through the ripple effects caused by production stoppages and supply chain disruptions in East Asia… and felt especially in economies that are closely integrated in global value chains are being overtaken by events.”

“It is now evident that pandemic mitigation efforts and lockdowns around the world will have devastating effects on all economies, independent of their links to global supply networks,” UNCTAD said.

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The “consensus is that most if not all major economies will experience a deep recession”, it added.

AFP with additional input by GVS News Desk