The report, entitled The Shape of Things to Come: The FDI Outlook for 2009 and Performance Analysis for 2008 and published with the April/May issue of fDi Magazine, provides insight into why the greenfield FDI market continued to grow so strongly in 2008 and what the drivers are for long-term growth in FDI. The key trends highlighted include the shift to developing countries and rapidly urbanising cities, and to services and the emerging environmental technology sectors.

fDi Intelligence recorded 15,551 greenfield FDI projects worth about $1500bn in 2008, creating an estimated 4 million direct jobs and 12 million indirect jobs worldwide.

With recession reducing global GDP and the financial crisis making it more difficult to raise financing, fDi Intelligence anticipates a decline of 13% in the number of greenfield FDI projects in 2009. Greenfield investment in developed economies is expected to fall significantly more than this, and investment in developing economies is expected to achieve similar levels to 2008.

The fDi Intelligence forecasts for greenfield FDI in 2009 are in line with the 9% decline in world exports expected by the World Trade Organization. However, they differ considerably from forecasts that include mergers and acquisitions within the FDI figures. Due to the steep decline in M&A activity this year, some organisations are predicting a fall of up to 50% in FDI flows.

The impact of the global recession and credit crunch on 'real' investment is far lower than on overall foreign investment flows.

fDi Intelligence's analysis of destination markets for 2008 indicates how the FDI market has transformed in recent years:

• In 2008, Asia-Pacific was the leading region for FDI, accounting for 33% of global FDI projects, 31% of capital investment and 37% of FDI jobs.

• While still relatively low compared to the other regions of the world, FDI in Latin America and the Caribbean, Middle East and Africa boomed in 2008. The number of FDI projects recorded in Africa nearly doubled.

• The shift to emerging markets is also clear at city level - in 2008, for the first time, Dubai became the number one city in the world for FDI, usurping London. Shanghai and Beijing were also among the top five cities. The importance of cities as growth poles of the global economy is indicated by the fact that the top five cities attracted 8% of global FDI projects.

Within each region of the world, the report reveals some notable trends:

• In Asia-Pacific, the leading region for FDI, growth slowed in China in 2008. A decline is forecast in greenfield investment in China in 2009 as the sharp reduction in GDP growth reduces China's FDI market size by about $150bn compared with what investors were projecting just a year ago. The growth economies for FDI in 2008 were Thailand, Azerbaijan and Kazakhstan.

• In Europe, Turkey was the fastest-growing location for FDI, followed by Russia and Serbia. Russia became the sixth leading location for greenfield FDI projects in the world in 2008.

• In Latin America and the Caribbean, Mexico was the number one location for number of FDI projects and Brazil was top for capital investment. The other leading countries for FDI were Argentina, Colombia and Chile. These top five countries accounted for threequarters of FDI in the region. Peru was the fastest-growing country for FDI, and former star performer Costa Rica recorded the biggest decline in projects - although relative to its size, Costa Rica remains hugely successful in attracting FDI.

• In Africa - the fastest-growing region for FDI in the world - the top countries for FDI projects in 2008 were South Africa, Morocco, Egypt, Algeria and Tunisia. In terms of capital investment, Nigeria was the leading location and Libya was among the top five. Uganda, Mozambique and Ghana were the fastest-growing locations for FDI.

• Greenfield investment in the Middle East is dominated by the United Arab Emirates - and Dubai in particular. In 2008, Dubai accounted for 35% of FDI projects in the region. Dubai was also among the top five cities in the world for outward investment, measured by capital investment by Dubai headquartered companies overseas. And Oman was the fastest-growing country in the Middle East for inward investment.

Meanwhile, analysis of the source markets for greenfield investment shows a significant growth in FDI from developing countries:

• The number of projects from developing countries increased by 50% in 2008, compared with a 25% increase in investment from developed economies.

• The market share of developing countries in global greenfield FDI projects increased from 14% in 2007 to 17% in 2008.

• Africa was the fastest growing region, with a tripling of outward FDI projects, followed by west Asia (the Middle East and Turkey), where there was a doubling of investment projects.

• Asia and Oceania and the transition economies recorded a 50% growth in outward projects.

The report also examines FDI trends by industry. It reveals the shift of the global FDI market to services, reflecting the wider shift in the world economy:

• For the first time, financial services overtook software and IT services to become the leading sector for FDI. These two sectors, combined with business services, accounted for 27% of global FDI projects, more than the 23% share accounted for by manufacturing projects.

• Manufacturing projects have declined sharply from their peak of 34% of FDI projects in 2003.

• The growth of emerging industries, in particular environmental technologies, is significant, with the number of FDI projects in alternative and renewable energy increasing 10-fold from 2003 to 2008.

• The sectors expected to remain resilient as sources of FDI projects include renewable energy; healthcare; food and beverages; aerospace; professional services; coal, oil and natural gas; and headquarters facilities.

• The sectors expected to decline are mostly those linked to consumer goods and related sub-supply, such as automotives; chemicals; electronics; textiles; communications; real estate; and plastics and rubber.

-Ends-

About the report
The report provides a comprehensive analysis of crossborder greenfield investment trends in 2008 and the outlook for 2009. Information in the report is based on the fDi Markets database, which tracks greenfield investment projects. It does not include M&A or other equity-based or non-equity investments. Only new investment projects and significant expansions of existing projects are included. The data presented includes FDI projects that have either been announced or opened by a company.

To download a pdf of the report, please visit www.fdiintelligence.com/outlook

About fDi Intelligence
fDi Intelligence is a specialist division of the Financial Times Ltd that provides insight into the business of globalisation, with a portfolio of products, services and business tools that allow both companies and economic development organisations to make informed decisions about foreign direct investment.

fDi Markets is the most authoritative source of intelligence on real investment in the global economy and the only source of greenfield investment data that covers all countries and industries worldwide.For more information please visit www.fdiintelligence.com

Contact
For more information on the report or for in-depth data on any country, region or sector,
please contact
+44 (0) 207 775 6667
fdiintelligence@ft.com

© Press Release 2009

 

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