* Qatar’s 'normalisation' of relations with three GCC members will improve its investment prospects specifically and likely to boost intraregional flows, says the United Nations Conference on Trade and Development
Qatar's foreign direct investment (FDI) inward stock was valued at $28.62bn in 2020, according to the United Nations Conference on Trade and Development (UNCTAD).
UNCTAD noted the country's “normalisation of relations with the three GCC members will improve investment prospects for Qatar specifically and likely to boost intraregional flows.”
The normalisation of relations between Qatar and other members of the Gulf Co-operation Council is also expected to encourage FDI in West Asia, UNCTAD said in its ‘World Investment Report 2021’.
The rebound in commodity prices in 2021 is expected to stimulate demand, driving a recovery in natural resource-seeking FDI.
Oil prices are projected to increase by more than 20% in 2021, which will significantly encourage future FDI flows to West Asia through its major oil-exporting economies.
FDI flows to West Asia that comprises the GCC region increased by 9% to $37bn in 2020, UNCTAD noted. A significant rise in M&As (60% to $21bn) drove this growth, particularly some key acquisitions in natural resource-related projects in some of the region’s main economies.
By contrast, the pandemic combined with low energy prices and commodity prices significantly curtailed greenfield investment projects. The impact was particularly severe in the region’s relatively smaller economies, where the needs for investment are the greatest.
The Covid-19 crisis caused a dramatic fall in foreign direct investment (FDI) in 2020. Global FDI flows dropped by 35% to $1tn, from $1.5tn in 2019. This, UNCTAD noted is almost 20% below the 2009 trough after the global financial crisis.
The decline was heavily skewed towards developed economies, where FDI fell by 58%, in part due to oscillations caused by corporate transactions and intrafirm financial flows.
FDI in developing economies decreased by a more moderate 8%, mainly because of resilient flows in Asia. As a result, developing economies accounted for two thirds of global FDI, up from just under half in 2019, UNCTAD said.
FDI patterns contrasted sharply with those in new project activity, where developing countries are bearing the brunt of the investment downturn. In developing countries, the number of newly announced greenfield projects fell by 42% and the number of international project finance deals – important for infrastructure – by 14%. This compares to a 19% decline in greenfield investment and an 8 per cent increase in international project finance in developed economies. All components of FDI were down.
The overall contraction in new project activity, combined with a slowdown in cross-border mergers and acquisitions (M&As), led to a decline in equity investment flows by more than 50%. With profits of multinational enterprises (MNEs) down 36% on average, reinvested earnings of foreign affiliates – an important part of FDI in normal years – were also down. The impact of the pandemic on global FDI was concentrated in the first half of 2020.
In the second half, cross-border M&As and international project finance deals largely recovered. But greenfield investment – more important for developing countries – continued its negative trend throughout 2020 and into the first quarter of 2021, UNCTAD said.
UNCTAD noted the country's “normalisation of relations with the three GCC members will improve investment prospects for Qatar specifically and likely to boost intraregional flows.”
The normalisation of relations between Qatar and other members of the Gulf Co-operation Council is also expected to encourage FDI in West Asia, UNCTAD said in its ‘World Investment Report 2021’.
The rebound in commodity prices in 2021 is expected to stimulate demand, driving a recovery in natural resource-seeking FDI.
Oil prices are projected to increase by more than 20% in 2021, which will significantly encourage future FDI flows to West Asia through its major oil-exporting economies.
FDI flows to West Asia that comprises the GCC region increased by 9% to $37bn in 2020, UNCTAD noted. A significant rise in M&As (60% to $21bn) drove this growth, particularly some key acquisitions in natural resource-related projects in some of the region’s main economies.
By contrast, the pandemic combined with low energy prices and commodity prices significantly curtailed greenfield investment projects. The impact was particularly severe in the region’s relatively smaller economies, where the needs for investment are the greatest.
The Covid-19 crisis caused a dramatic fall in foreign direct investment (FDI) in 2020. Global FDI flows dropped by 35% to $1tn, from $1.5tn in 2019. This, UNCTAD noted is almost 20% below the 2009 trough after the global financial crisis.
The decline was heavily skewed towards developed economies, where FDI fell by 58%, in part due to oscillations caused by corporate transactions and intrafirm financial flows.
FDI in developing economies decreased by a more moderate 8%, mainly because of resilient flows in Asia. As a result, developing economies accounted for two thirds of global FDI, up from just under half in 2019, UNCTAD said.
FDI patterns contrasted sharply with those in new project activity, where developing countries are bearing the brunt of the investment downturn. In developing countries, the number of newly announced greenfield projects fell by 42% and the number of international project finance deals – important for infrastructure – by 14%. This compares to a 19% decline in greenfield investment and an 8 per cent increase in international project finance in developed economies. All components of FDI were down.
The overall contraction in new project activity, combined with a slowdown in cross-border mergers and acquisitions (M&As), led to a decline in equity investment flows by more than 50%. With profits of multinational enterprises (MNEs) down 36% on average, reinvested earnings of foreign affiliates – an important part of FDI in normal years – were also down. The impact of the pandemic on global FDI was concentrated in the first half of 2020.
In the second half, cross-border M&As and international project finance deals largely recovered. But greenfield investment – more important for developing countries – continued its negative trend throughout 2020 and into the first quarter of 2021, UNCTAD said.