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China, India drive Asia to defy COVID-19-induced investment slump

Foreign direct investment inflows to Asia rose 4% to $535 billion (€449 billion) last year, defying the COVID-19 pandemic as foreign investors continued to bet on the region's biggest markets, China and India, the World Investment Report 2021 by United Nations Conference on Trade and Development showed.

The rise contrasted with a steep fall in global flows of foreign direct investment (FDI), which fell by 35% to $1 trillion, hurt by a pandemic-induced recession — the worst since World War II. The slump meant that global investment flows last year were almost one-fifth below the 2009 trough after the global financial crisis.

Developed economies saw a dramatic drop in foreign investment, with Europe registering an 80% slump. Emerging economies fared better, thanks to resilient flows in Asia. They accounted for two-thirds of global FDI, up from just under half in 2019.

"Overall, Asia remains the strongest engine of global FDI," said Richard Bolwijn, one of the authors of the report. "It remains attractive because of the high growth numbers, because of the shifting of manufacturing capacity from China to other lower-income countries in the region, and because of the prospects for further growth of regional value chains."


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