GLOBAL FDI FLOW HALVED IN FIRST QUARTER OF 2009

BANGKOK, June 25 (Bernama) -- Global foreign direct investment (FDI) inflow
and cross-border mergers and acquisitions (M&As), drastically declined in the
first quarter of 2009.

According to the United Nations Conference on Trade and Investment (Unctad)
Thursday, it declined by 54 percent and 77 percent respectively.

The drop was a continuation from the last quarter of 2008 and prospects for
FDI would remain gloomy for the rest of the year, the agency said in its latest
outlook of the global FDI trend.

Unctad secretary-general Supachai Panitchpakdi said a renewed commitment by
policy makers to an open environment for international investment, would play an
important role in maintaining favourable conditions for a recovery in FDI
flow.

It said the 54 percent decline was apparent among the 57 countries for which
quarterly data on FDI inflow was available as of mid-June 2009. These countries
account for roughly 60 percent of global FDI inflow.

Forty-three countries, including major host countries such as Brazil,
China, and Russia, recorded a decline.

FDI outflow for the same period fell by 57 percent for 47 countries --
accounting also for about 60 percent of global FDI outflow -- for which such
data is available.

Thus, the majority of these countries (37 out of 47), including major
investors such as France, Germany, Japan, and the United States, experienced a
decline in FDI outflow in the first quarter of 2009.

Unctad said recent data on cross-border M&As confirmed this trend as it
decreased by 77 percent for all countries in value in the first quarter of 2009
as compared to the first quarter of 2008, and by 62 percent over the last
quarter of 2008.

All three groups of economies -– developed countries, developing countries,
and transition economies (South-East Europe and the Commonwealth of Independent
States (CIS) -– experienced a fall in cross-border M&As.

If the first quarter trend continues, the projection for the whole of 2009
is for the global FDI inflow to drop by close to half.

While developed countries are mainly responsible for the fall of FDI in 2009
they have experienced a nearly 60 percent decline.

Developing countries and transition economies are also this time
experiencing a decline.

For developing nations, the reduction is expected to be as much as 25
percent and for transition economies as much as 40 percent, Unctad said. It
added that M&A sales are also likely to fall by two-thirds globally.

According to the preliminary results of Unctad's World Investment Prospects
Survey (WIPS) 2009-2011, to be released in July, nearly two-thirds of
respondent transnational corporations (TNCs) anticipate a decline in their FDI
expenditure this year.

TNCs have been hit by the consequences of the global economic slowdown,
leading to failing market expectations, tighter credit conditions, reduced value
of assets following the stock market decline, and falls in corporate profits.

"As a result, companies anticipate a sharp decrease in their FDI expenditure
for 2009. Many have announced plans to curtail output, lay off workers and cut
capital expenditure.All of these have implications for FDI," Unctad said.

-- BERNAMA