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Global flows of Foreign Direct Investment (FDI) registered a year-on-year growth of 77% in 2021, up to an estimated 1.65 trillion dollars, reported this Wednesday the United Nations Conference on Trade and Development (UNCTAD).

Developed economies saw the largest increase, with FDI reaching $777 billion in 2021, three times the exceptionally low level of 2020.

In Europe, more than 80% of the increase in flows was due to large changes in the conduit economies (Ireland, Luxembourg, the Netherlands and Switzerland).

Meanwhile, inflows into the United States more than doubled, with the increase explained entirely by an increase in fusions and acquisitions cross-border

FDI flows to developing economies rose 30% to nearly $870 billion, with growth accelerating in East and Southeast Asia (+20%), a recovery to near-pandemic levels in Latin America and the Caribbean, and a rebound in West Asia.

Inflows into Africa also increased. Most recipients across the continent saw a moderate increase in FDI; the total for the region more than doubled, inflated by a single intra-company financial transaction in South Africa in the second half of 2021.

Of the total increase in global FDI flows in 2021 ($718 billion), more than $500 billion, or nearly three-quarters, was in developed economies.

Developing economies, especially least developed countries (LDCs), experienced more modest catch-up growth.

Going forward, the outlook for global FDI in 2022 is positive, according to the UNCTAD.

“The rebound growth rate of 2021 is unlikely to be repeated. The underlying trend (net of conduit flows, one-time transactions and intra-firm financial flows) will remain relatively subdued, as in 2021,” UNCTAD said.

Their projections consider that the financing of international projects in the infrastructure sectors will continue to provide a growth impetus.

The prolonged duration of the health crisis with successive new waves of the pandemic remains a significant downside risk.

At the same time, he added, the rhythm of the vaccines against Covid-19, especially in developing countries, as well as the speed of implementation of the infrastructure investment stimulus, continue to be important factors of uncertainty.

Other major risks, including labor and supply chain bottlenecks, energy prices and inflationary pressures, will also weigh on results.

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