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Global Investment Flows Rebound, Reaches $852bn in 2021

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After a big drop in 2021 caused by the COVID-19 pandemic, global Foreign Direct Investment (FDI) reached an estimated 852 billion dollars in the first half of 2021, showing a stronger than expected rebound.

The latest Investment Trends Monitor released on Tuesday by the United Nations Conference on Trade and Development (UNCTAD) showed increase in the first two quarters.

It shows the increase in the first two quarters in FDI, recovered more than 70 per cent of the losses stemming from the COVID-19 crisis in 2020.

For the UNCTAD’s director of investment and enterprise, James Zhan, the good news “masks the growing divergence in FDI flows between developed and developing economies, as well as the lag in a broad-based recovery of the greenfield investment in productive capacity”.

Zhan however warns that “uncertainties remain abundant”.

The duration of the health crisis, the pace of vaccinations, especially in developing countries, and the speed of implementation of infrastructure stimulus, remain important factors of uncertainty.

Other important risk factors are labour and supply chain bottlenecks, rising energy prices and inflationary pressures.

Despite these challenges, the global outlook for the full year has improved from earlier projections.

The growth in the next few months should be more muted than the in the first half of the year, but it should still take FDI flows to beyond pre-pandemic levels.

Between January and June, developed economies saw the biggest rise, with FDI reaching an estimated 424 billion dollars, more than three times the exceptionally low level in 2020.

In Europe, several large economies saw sizeable increases, on average remaining only five per cent below pre-pandemic quarterly levels.

Inflows in the United States were up by 90 per cent, driven by a surge in cross-border mergers and acquisitions.

FDI flows in developing economies also increased significantly, totalling 427 billion dollars in the first half of the year.

There was a growth acceleration in east and southeast Asia (25 per cent), a recovery to near pre-pandemic levels in Central and South America, and upticks in several other regional economies across Africa,  and West and Central Asia.

Of the total recovery increase, 75 per cent was recorded in developed economies.

High-income countries more than doubled quarterly FDI inflows from rock bottom 2020 levels, middle-income economies saw a 30 per cent increase, and low-income economies a further nine per cent decline.

Growing investor confidence is most apparent in infrastructure, boosted by favourable long-term financing conditions, recovery stimulus packages and overseas investment programmes.

International project finance deals were up 32 per cent in number, and 74 per cent in value terms. Sizeable increases happened in most high-income regions, and in Asia and South America.

In contrast, UNCTAD says investor confidence in industry and value chains remains shaky. Greenfield investment project announcements continued their downward path, decreasing 13 per cent in number and 11 per cent in value until the end of September.

After suffering double-digit declines across almost all sectors, the recovery in areas relevant to Sustainable Development Goals (SDGs) in developing countries remains fragile.

The combined value of announced greenfield investments and project finance deals rose by 60 per cent, but mostly because of a small number of very large deals in the power sector.

International project finance in renewable energy and utilities continues to be the strongest growth sector.

The investment in projects relevant to the SDGs in least developed countries continued to decline precipitously.

New greenfield project announcements fell by 51 per cent, and infrastructure project finance deals by 47 per cent. Both had already fallen 28 per cent last year. (NAN)

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Foreign News

Israeli Forces Vow Response to Iran’s Attack Despite Calls for Restraint

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Israelis awaited word on how Prime Minister Benjamin Netanyahu would respond to Iran’s first-ever direct attack as international pressure for restraint grew amid fears of an escalation of conflict in the Middle East.

Netanyahu on Monday summoned his war cabinet for the second time in less than 24 hours to weigh a response to Iran’s massive weekend missile and drone attack, a government source said.

While the attack caused no deaths and little damage, thanks to the air defences and countermeasures of Israel and its allies, it has increased concerns that violence rooted in the Gaza war is spreading, and fears of open war between the long-time foes.

Israeli military chief of staff Herzi Halevi said on Monday that “this launch of so many missiles – cruise missiles and drones – into Israeli territory will be met with a response” but gave no details.

Iranian Deputy Foreign Minister Ali Bagheri Kani told state TV on Monday night that Tehran’s response to any Israeli retaliation would come in “a matter of seconds, as Iran will not wait for another 12 days to respond”.

But the prospect of Israeli retaliation has alarmed many Iranians already enduring economic pain and tighter social and political controls since protests in 2022-23.

Iran launched the attack in retaliation for an airstrike on its embassy compound in Damascus on April 1 attributed to Israel, and signalled that it did not seek further escalation.

U.S. President Joe Biden told Netanyahu at the weekend that the United States, which helped Israel blunt the Iranian attack, would not participate in an Israeli counter-strike.

Since the war in Gaza began in October, clashes have erupted between Israel and Iran-aligned groups based in Lebanon, Syria, Yemen, and Iraq.

Israel said four of its soldiers were wounded hundreds of metres inside Lebanese territory overnight, the first known Israeli ground penetration into Lebanon since the Gaza war erupted, although it has traded fire with the Lebanese Hezbollah militia.

“We’re on the edge of the cliff and we have to move away from it,” Josep Borrell, the European Union’s foreign affairs chief, told Spanish radio station Onda Cero.

French President Emmanuel Macron, German Chancellor Olaf Scholz and British Foreign Secretary David Cameron made similar appeals.

Washington and UN Secretary-General Antonio Guterres also have called for restraint.

White House national security spokesman John Kirby declined on Monday to say if Biden had urged Netanyahu in talks on Saturday night to exercise restraint in responding to Iran.

“We don’t want to see a war with Iran. We don’t want to see a regional conflict,” Kirby told a briefing, adding that it was for Israel to decide “whether and how they’ll respond”.

Foreign Minister Israel Katz said he was “leading a diplomatic attack” alongside Israel’s military response, writing to 32 countries to place sanctions on Iran’s missile programme and proscribe its Revolutionary Guards Corps as a terrorist organisation.

U.S. Treasury Secretary Janet Yellen said Iran’s actions threatened stability in the Middle East and could cause economic spillovers.

The U.S. would use sanctions, and work with allies, to keep disrupting Iran’s “malign and destabilising activity”, she added.

However, some analysts said the Biden administration was unlikely to seek to sharpen sanctions on Iran’s oil exports due to worries about boosting oil prices and angering top buyer China.

In a call between the Chinese and Iranian foreign ministers, China said it believed Iran could “handle the situation well and spare the region further turmoil” while safeguarding its sovereignty and dignity, according to Chinese state media.

Russia has refrained from publicly criticising its ally Iran but has also warned against further escalation.

Iran’s retaliatory attack, involving more than 300 missiles and drones, caused modest damage in Israel and wounded a 7-year-old girl.

Most missiles and drones were shot down by Israel’s Iron Dome defence system and with help from the U.S., Britain, France and Jordan.

In Gaza itself, where more than 33,000 Palestinians have been killed in the Israeli offensive according to Gaza health ministry figures, Iran’s action drew applause.

Israel began its campaign against Hamas, the Iranian-backed Palestinian militant group that runs Gaza, after Hamas attacked Israel on Oct. 7, killing 1,200 people and taking 253 hostages, by Israeli tallies.

British Prime Minister Rishi Sunak said the Group of Seven major democracies were working on a package of coordinated measures against Iran.

Italy, which holds the rotating G7 presidency, said it was open to new sanctions and suggested any new measures would target individuals.

Iran’s attack prompted at least a dozen airlines to cancel or reroute flights, with Europe’s aviation regulator still advising caution in using Israeli and Iranian airspace. (Reuters/NAN)

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Foreign News

50 killed in Afghanistan Road Accidents During Eid Holiday

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No fewer than 50 people died and 185 others injured in road accidents during the four-day Eid el Fitr holiday
across Afghanistan.

The country’s General Directorate of Traffic Police on Monday said a total of 102 road accidents occurred across Afghanistan in the period, killing 50 commuters, including eight women and 13 children, and injuring 185 others.

Herat, Ghazni, and Paktika were among 34 provinces of the country where most of the road accidents took place, the department said.

Overspeeding, reckless driving, non-compliance to traffic rules, and lack of traffic signals on highways were the main causes of the deadly accidents, the government agency said.

(Xinhua/NAN)

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Foreign News

U.S. not Expecting to be Drawn into War but Predicts Attack by Iran Against Israel

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The United States expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, a U.S. official said late on Thursday.

The White House said earlier that Washington did not want conflict to spread in the Middle East and the U.S. had told Iran it was not involved in an air strike against a top Iranian military commander in Damascus.

The White House added it warned Iran to not use that attack as a pretext to escalate further in the region.

Suspected Israeli warplanes bombed Iran’s embassy in Damascus on Monday in a strike for which Iran has vowed revenge and in which a top Iranian general and six other Iranian military officers were killed, ratcheting up tension in a region already strained by the Gaza war.

Iranian sources told Reuters that Tehran has signalled to Washington that it will respond to Israel’s attack on its Syrian embassy in a way that aims to avoid major escalation and it will not act hastily, as Tehran presses demands including a Gaza truce.

The United States has been on high alert about possible retaliatory strikes from Iran and U.S. envoys have been working to lower tensions.

Palestinian Islamist group Hamas attacked Israel on Oct. 7, killing 1,200, according to Israeli tallies.

Israel’s military assault on Hamas-governed Gaza has since killed more than 33,000 people according to the local health ministry, displaced nearly all of Gaza’s 2.3 million population, caused a humanitarian crisis, and led to genocide allegations that Israel denies.

Iran-backed groups have declared support for Palestinians, waging attacks from Lebanon, Yemen, and Iraq.

Tehran has avoided direct confrontation with Israel or the United States, while declaring support for its allies. (Reuters/NAN)

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