The recovery from 2010 has nonetheless made up only one fifth of the ground lost during the financial crisis of 2008–2009. Inflows remained at 77 per cent of the pre-crisis three-year average (2005–2007). Inflows to Europe, which had declined until 2010, showed a strong turnaround while robust recovery in the United States of America continued. While Australia and New Zealand attracted significant volumes, Japan saw a net divestment for the second successive year.
The report was launched in Manama on Thursday during a jointly held Press conference by UNCTAD Chief of Investments Paul Wessendorp and Ausamah A. Al Absi, board member of the Bahrain-based MENA Centre.
The United States and Belgium, respectively, maintained their positions as the largest- and second-largest recipients of FDI among the developed countries.
Recovery of outward FDI from developed countries gathered pace in 2011; the outflows exceeded $1.2trillion, a level comparable to the pre-crisis average over 2005–2007, the report says. The robust growth (up 25 per cent from 2010) came on the strength of outward FDI from the United States, which reached $397 billion – above the country’s 2007 peak – and from Japan, which doubled its level of2010. The picture in Europe is more mixed.
Britain and Northern Ireland almost tripled (up 171 per cent) to $107 billion, flows from Germany ($54billion) dropped by half, and the Netherlands ($32 billion) by nearly as much. Outflows from Denmark and Portugal are at record highs, meanwhile. Japan became the second largest investor among developed countries after the United States. Despite the intensified eurozone crisis, total FDI flows into and out of the four most affected countries –Greece, Italy, Portugal and Spain – appear to show little impact, although underlying variables show signs of distress, the report says. Reinvested earnings were down in all four countries and foreign transnational corporations withdrew debt capital from their foreign affiliates in those countries. Data on FDI outflows suggest that transnational corporations based in those countries may have transferred some assets to foreign affiliates (or left assets there in the form of reinvested earnings).Developed countries’ recovery in incoming and outgoing FDI will be tested severely in 2012, the report predicts. Forecasts based on economic fundamentals suggest inflows will be holding steady in North America and managing a modest increase in Europe. However, the increasing shares of intra-company loans and reinvested earnings make FDI flows volatile and hard to predict, especially in Europe. Data for developed countries show a fall of more than 60 per cent in cross-border sales of mergers and acquisitions and 76 per cent in cross-border purchases thereof over the first five months of 2012.Announcement-based green-field data – that is, statistics on from-the-ground-up investments in new ventures – show the same tendency, down 24 per cent.