Coronavirus could cut global investment by 40%, new estimates show
A new UNCTAD analysis of how the coronavirus pandemic will affect global foreign direct investment (FDI) prospects shows that the negative impact will be worse than previously projected on 8 March.
Updated estimates of COVID-19’s economic impact and revisions of earnings of the largest multinational enterprises (MNEs) now suggest that the downward pressure on FDI flows could range from -30% to -40% during 2020-2021, much more than previous projections of -5% to -15%.
Since then, 61% of the top 100 MNEs that UNCTAD tracks have issued earnings revisions that confirm the rapid deterioration of global prospects. And 57% have warned of the global demand shock’s impact on sales, showing that COVID-19 is causing problems beyond supply chain disruptions after a production slowdown in parts of China.
In addition, the top 5,000 MNEs, which account for a significant share of global FDI, have now seen downward revisions of 30% on average for 2020 earnings estimates. And the trend is likely to continue.
The hardest-hit sectors are the energy and basic materials industries (-208% for energy, with the additional shock caused by the recent drop in oil prices), airlines (-116%) and the automotive industry (-47%).
Global Investment Trend Monitor, No. 35
[Special Coronavirus Edition]