The global economy is going through uncertainty. The macroeconomic indicators are weak. Trade tensions and policy uncertainty have affected economic growth. According to the World Bank, global economy grew 2.4% in 2019, and is projected to grow 2.5% in 2020. Amid weaker economic conditions, the global foreign direct investment (FDI) in 2019 declined compared to 2018. Here we take a look at the top 10 countries that attracted the most FDI in 2019.
The United Nations Conference on Trade and Development (UNCTAD) has published its Global Investment Trends Monitor report. According to the report, the global FDI flows stood at $1.39 trillion in 2019, down marginally from $1.41 trillion in 2018. While some countries witnessed a steep drop in foreign investments, others were able to attract more foreign investments than ever before.
As per the Global Investment Trends Monitor report, the FDI flows in developing economies remained flat at an estimated $695 billion. But the flow of FDI to developed economies fell 6% to $643 billion. The UNCTAD report showed that Latin America attracted 16% more FDI in 2019 compared to 2018.
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These are the top 10 countries that attracted the most FDI in 2019, according to the Global Investment Trends Monitor report.
10- Germany, $40 billion
Foreign direct investments in Germany more than tripled in 2019 to $40 billion. The European economic powerhouse had attracted only $12 billion FDI in 2018. As per UNCTAD, the inflows to Germany got a boost as large corporations extended loans to their foreign affiliates in a year of slow growth. Germany is an attractive investment destination because of its skilled workforce, ease of doing business, and advanced infrastructure.
9- Canada, $47 billion
The FDI flows into Canada jumped 8% to $47 billion in 2019. The increased inflow was primarily due to multinational enterprises (MNEs) extending loans to their foreign affiliates.
8- India, $49 billion
The Indian economy experienced a slowdown in 2019. But foreign investors continued to pour money into the country. India attracted $49 billion in foreign investments in 2019, up 16% from $42 billion in 2018. The majority of FDI went into the services sector, including information technology.
7- France, $52 billion
Paris is among cities hosting the most multinational corporations. According to the UNCTAD report, FDI flows to France jumped from $37 billion in 2018 to $52 billion in 2019. The increase can be attributed to multinational corporations extending more loans to their foreign affiliates.
6- Hong Kong, $55 billion
Hong Kong, a special administrative region of China, has consistently ranked among countries attracting the most FDI. However, the massive protests in 2019 hurt the inflow of not only tourists but also foreign investments in Hong Kong. Its FDI inflow declined 48% from $104 billion in 2018 to $55 billion in 2019.
5- United Kingdom, $61 billion
The United Kingdom was another country that witnessed a YoY decline in FDI inflows. It received $61 billion worth of foreign investments in 2019, down from $65 billion in 2018. Its FDI inflow was affected by the Brexit saga. Several businesses large and small have been moving out of the UK to other European nations as Brexit unfolds. The country boasts an efficient labor market, a skilled workforce, and a robust financial system.
4- Brazil, $75 billion
Total FDI flow into Latin America and the Caribbean surged 16% to $170 billion in 2019. Brazil alone accounted for 44% of that. Foreign investments in Brazil jumped 26% from $60 billion in 2018 to $75 billion in 2019. The country’s privatization program has opened new investment opportunities for foreign investors.
3- Singapore, $110 billion
Singapore remains an attractive investment destination in these uncertain times. FDI inflows to Singapore’s FDI inflow jumped 42% from $78 billion in 2018 to $110 billion in 2019. It is one of the biggest winners in the US-China trade war. Singapore is known for its world-class infrastructure, ease of doing business, transparency, and a robust financial system.
2- China, $140 billion
China was the second largest recipient of foreign direct investments in 2019. Its FDI inflows were $140 billion in 2019 and $139 billion in 2018. Despite being the world’s second largest economy, China continues to grow at a healthy rate as it shifts its economy from export-oriented to domestic consumption.
1- United States, $251 billion
The United States has once again topped the list of countries that attracted the most FDI. The FDI inflow to the US declined marginally from $254 billion in 2018 to $251 billion in 2019. Germany, Japan, and the Netherlands were the largest investors in the US. Investments coming from Canada declined 24% and those from the European Union fell 6%.
Looking forward, the UNCTAD report expects the global FDI to grow moderately in 2020. The improving macroeconomic conditions in 2020 and 2021 will encourage multinational corporations to resume investments in productive assets. However, the world continues to face geopolitical risks, protectionist policies, and high debt burden among developing countries.