Friday, December 3, 2010

International investment limps into 2011, says OECD report

KUALA LUMPUR: International investment remained flat well into the fourth quarter of 2010, but nonetheless represented an improvement over two years of steep declines in 2008 and 2009, according to the lead article in the latest issue of the Organisation for Economic Co-operation and Development's (OECD) Investment News bulletin.

In a statement Dec 2, the OECD projected that global Foreign Direct Investment (FDI) flows would decline by around 8% in 2010, a markedly better performance over the 19% drop in FDI flows seen in 2008 and the 43% decline in 2009.

If current trends hold, international M&A investment, an important component of FDI, will hover near US$ 670 billion in 2010, an increase of 6% over 2009, it said.

This would be the first increase in international M&A activity since 2007, following declines of 21% in 2008 and 53% in 2009, according to the report.

'Lacking any clear momentum of its own, international investment in 2011 will be particularly sensitive to the strength of the economic recovery across the global economy.

'It will also be sensitive to whether G20 countries can avoid investment protectionism or any further conflict over foreign exchange policies, which could create uncertainty over the pricing of international assets and the valuation of expected future income from these assets,' OECD said.

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