Direct, Overseas, Predicted
Recovery in direct investing overseas predicted
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International location experts who advise companies on their overseas investment plans expect foreign direct investment to take off again this year after three years of continuous decline.
In a survey conducted by the Geneva-based United Nations Conference on Trade and Development (Unctad) and Corporate Location magazine in the UK, three-quarters of corporate location experts predicted a better investment climate over the next two years and over 80 per cent were optimistic for 2006-07.Top magnets for foreign direct investment (FDI) are expected to be the booming economies of China and India, as well as the US, the world's biggest FDI recipient last year. These giants are followed by a string of smaller emerging economies - Thailand, Poland, the Czech Republic, Mexico and Malaysia.
The survey results, based on responses from 87 experts in different regions, are in tune with Unctad predictions that FDI will rebound this year in the wake of stronger global economic growth, higher company profitability, improved investor confidence and a pick-up in cross-border mergers and acquisitions. Last year, FDI flows stagnated at some $653bn (€547bn, £364bn), less than half the record $1,400bn made in 2000. However, inflows into the US and China, the first and second largest FDI recipients, rose to $87bn and a record $57bn respectively. By contrast, inflows into India were $3.4bn.
The corporate location experts said they expected governments to intensify efforts to attract FDI through greater liberalisation, additional incentives and increased sector targeting. Moreover, in spite of concern in the US and other western countries over outsourcing of professional jobs, the experts believe most relocations will involve lower value-added activities such as logistics and supply functions.
The Asia-Pacific region is seen as having the brightest FDI prospects in the short and medium term. For Latin America the experts are more optimistic in the short term, while for Africa they take the opposite view. Among developed countries, the UK, France and Canada are considered the best prospects after the US.
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