According to Unctad, world foreign direct investment (FDI) inflows decreased by -19% in 2018 to the lowest level in a decade, after already falling by about -20% in 2017. This data is aligned with evidence that global liquidity has been decreasing as a result of monetary policy tightening in the U.S. (reducing M&A activity, amongst others). Moreover, increasing digitalization, more trade openness (China, India) and renewed protectionism (U.S. trade policy, Brexit) acted as triggers of a more structural reversion to exports instead of investment in strategic internationalization choices. The FDI downtrend was magnified in Europe (-73% to USD100bn) as a result of the expected tightening by the ECB in 2019 and political uncertainties related to Brexit and Italy. FDI inflows to Africa, excluding South Africa, decreased again, by -11% to USD33bn after a -20% decline in 2017. It supports the view that debt is now the main financing scheme of deficit economies and may lead to credit events in the years to come (see our publication on Africa financing).
