Global foreign direct investment (FDI) is expected to fall 30 to 40 per cent during 2020-21 due to restrictions put in place to fight the spread of coronavirus, according to a new report from the United Nations.
“The outbreak and spread of coronavirus (Covid-19) will cause a dramatic drop in global foreign direct investment flows,” the United Nations Conference on Trade and Development (UNCTAD) said on Thursday.
“Since our first special issue on the impact of the pandemic, updated economic impact estimates and earnings revisions of the largest multinational enterprises (MNEs) now suggest that the downward pressure on FDI could be 30 per cent to 40 per cent during 2020-2021.”
Energy and basic material industries, airlines and the automotive industry are expected to suffer the most with FDI plunging by 208 per cent in the energy and basic materials sector, 116 per cent in airlines and 47 per cent in the automotive sector.
The UN agency in an earlier report this month predicted a global drop of 15 per cent in FDI due to the coronavirus. It revised numbers upwards due to the rapid spread of the disease across the globe.
“Earnings guidance by multinational enterprises in UNCTAD’s Top 100, a bellwether of FDI trends, confirms the rapid deterioration of prospects,” it said, adding 61 per cent of MNEs have issued statements about disruption since the first week of March.
“In addition to earlier concerns on production and supply chain disruptions among firms with strong supply chain links to China, 57 per cent of MNEs have added warnings on the impact on sales of the global demand shock caused by the pandemic. Covid-19 is no longer just a global value chain (GVC) problem.”
The latest assessment from the UNCTAD comes as coronavirus cases rise globally with over 460,000 infections and more than 22,000 deaths, according to Johns Hopkins University as of Thursday. Nearly 114,000 people have recovered.
The report noted the pandemic and the mitigation measures that governments are forced to impose are affecting all components of FDI.
“Real capital expenditure, greenfield investments and expansions are being hampered by physical closures of sites and production slowdowns. Cross-border M&As (mergers and acquisitions) are being delayed and new M&A announcements are on course to drop by 70 per cent globally in the first quarter.”
Cross-border M&A transactions worldwide averaged 1,200 deals per month in 2019, but only 874 deals were recorded in February and just 385 until March 20.
“They would be on course for a 50 per cent decrease in March, and at this clip a 70 per cent decline from last year’s levels next month.”
UNCTAD also said the decline in FDI will depend on the severity and duration of the pandemic across different regions and countries, and the scope of the containment measures that governments are forced to put in place.
“Importantly, it will also depend on the nature and scale of policy packages that most governments are now putting together to support their economies, which will determine the duration of the recession and the speed of recovery.”
“Most of these packages are expected to include investment support measures, such as accelerated depreciation of post-pandemic capital expenditures (especially in Asia, where a larger proportion of GDP is tied to investment demand).”
Governments across the world are announcing different packages to boost the economy. The US Senate this week unanimously approved a $2 trillion (Dh7.3tn) rescue plan, the largest in the country's history, to help soften the impact of the coronavirus pandemic on the world's largest economy.
In the region, the UAE government increased its stimulus package to Dh126 billion to support the economy and help small businesses whereas Saudi Arabia, the biggest economy in the Arab world, has also announced 120bn riyals (Dh117.3bn) worth of initiatives to mitigate the impact of the coronavirus outbreak on its economy.
UAE currency: the story behind the money in your pockets
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
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UAE currency: the story behind the money in your pockets
Company Profile
Company name: NutriCal
Started: 2019
Founder: Soniya Ashar
Based: Dubai
Industry: Food Technology
Initial investment: Self-funded undisclosed amount
Future plan: Looking to raise fresh capital and expand in Saudi Arabia
Total Clients: Over 50
How to register as a donor
1) Organ donors can register on the Hayat app, run by the Ministry of Health and Prevention
2) There are about 11,000 patients in the country in need of organ transplants
3) People must be over 21. Emiratis and residents can register.
4) The campaign uses the hashtag #donate_hope
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Key 2013/14 UAE Motorsport dates
October 4: Round One of Rotax Max Challenge, Al Ain (karting)
October 1: 1 Round One of the inaugural UAE Desert Championship (rally)
November 1-3: Abu Dhabi Grand Prix (Formula One)
November 28-30: Dubai International Rally
January 9-11: 24Hrs of Dubai (Touring Cars / Endurance)
March 21: Round 11 of Rotax Max Challenge, Muscat, Oman (karting)
April 4-10: Abu Dhabi Desert Challenge (Endurance)
More on animal trafficking
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs: Fenyr SuperSport
Price, base: Dh5.1 million
Engine: 3.8-litre twin-turbo flat-six
Transmission: Seven-speed automatic
Power: 800hp @ 7,100pm
Torque: 980Nm @ 4,000rpm
Fuel economy, combined: 13.5L / 100km
UAE currency: the story behind the money in your pockets