South Africa continued to be one of the biggest recipients of foreign direct investment (FDI) in 2016, despite global economic growth remaining weak, according to two reports.
The UN Conference on Trade and Development (Unctad) said on Thursday global flows of FDI fell 13 percent in 2016 to an estimated $1.52 trillion (R20.46 trillion) as global economic growth remained weak and world trade volumes posted remained anaemic.
However, Unctad said that South Africa had seen a 38 percent increase in FDI inflows, though this had remained at a relatively low level of $2.4 billion.
“FDI recovery continues along a bumpy road.
“Particularly of concern is the sharp drop-off in manufacturing investment projects, which play such an important role in generating badly needed productivity improvements in developing economies,” Unctad secretary-general Mukhisa Kituyi said.
The UN organ said FDI flows to Africa also registered a decline (5 percent to $51 billion), with the region sharing similar external vulnerabilities with Latin America.
The low level of commodity prices continues to have an impact on resource-seeking FDI.
It said flows to Angola more than halved after surging in 2015. Mozambique saw its FDI fall 11 percent, but the level was still significant at an estimated $ billion.
Uptick
However, there was some uptick in flows to parts of Africa, centred on traditional FDI recipients such as Egypt (from $6.9bn to $7.5bn) and Nigeria (from $3.1 billion to $4 billion).
In another development, the Institute of International Finance (IIF) said the January EM (emerging market) portfolio inflows reached a 5-month high.
The agency said net non-resident portfolio inflows were estimated to have been $12.3 billion in January, with equity markets ($7.7 billion) attracting more capital than debt markets ($4.6 billion).
“FDI recovery continues along a bumpy road.
“Particularly of concern is the sharp drop-off in manufacturing investment projects, which play such an important role in generating badly needed productivity improvements in developing economies,” Kituyi said.
“Looking ahead, economic fundamentals point to a potential increase in FDI flows by around 10 percent in 2017,” he said.
“However, significant uncertainties about the shape of future economic policy developments could hamper FDI in the short-term.”
Inflows
The IIF said net non-resident portfolio inflows were estimated at $12.3 billion in January, with equity markets ($7.7bn) attracting more capital than debt markets ($4.6 billion).
The IIF said this compared with outflows of $14.2 billion in January 2016. Non-resident portfolio inflows are estimated to have been $12.3 billion in January, with equity markets ($7.7 billion) attracting more capital than debt markets ($4.6 billion).
Impact
Unctad said the low level of commodity prices continued to have an impact on resource-seeking FDI.
Flows to Angola more than halved after surging in 2015. Mozambique saw its FDI fall 11 percent, but the level was still significant at an estimated $ 3 billion.
However, there was some uptick in flows to parts of Africa centred in countries like Nigeria and Egypt.