Investment flows to developing Asian countries to fall 30% to 45% due to COVID-19
Foreign direct investment (FDI) to developing economies in Asia, hit hard by the economic downturn caused by the coronavirus pandemic, are projected to decline by up to 45% in 2020
Global flows of foreign direct investment (FDI) will be under severe pressure this year as a result of the COVID-19 pandemic.
These vital resources are expected to fall sharply from 2019 levels of $1.5 trillion, dropping well below the trough reached during the global financial crisis and undoing the already lackluster growth in international investment over the past decade.
Foreign direct investment (FDI) to developing economies in Asia, hit hard by the economic downturn caused by the coronavirus pandemic, is projected to decline by up to 45% in 2020, according UNCTAD’s World Investment Report 2020.
Investment from South-East Asia declined from $63 billion in 2018 to $56 billion, primarily
because of a drop in investment from Indonesia and Thailand.
Flows to developing countries will be hit especially hard, as export-oriented and commodity-linked investments are among the most seriously affected.
The South-East Asia region is experiencing a significant economic slowdown, including a major disruption of production and supply chains in many industries.
Lockdown measures have led to factory stoppages. Major automotive manufacturers in Thailand such as Mazda, Mitsubishi and Nissan (all Japan) have temporarily halted production.
Ford (United States) has temporarily suspended production in Thailand and Viet Nam, while Toyota (Japan) has done the same at plants in Indonesia and Thailand.
Bleak prospects for 2020
The number of announced greenfield investments in the first quarter of 2020 dropped by 37%. The number of mergers and acquisitions (M&As) fell by 35% in April 2020.
“Lockdown measures and factory stoppages impacted supply chain and factories’ production in the region. Falling corporate earnings, a slump in global and regional demand and economic slowdown have led multinational enterprises (MNEs) to postpone investment plans.”
UNCTAD’s director of investment and enterprise, James Zhan.
The pandemic will precipitate a fall in reinvested earnings of foreign affiliates based in the region, affecting investment. It underscored the vulnerability of these supply chains and the significance of the role of China and other Asian economies as global production hubs.
Outward FDI is also expected to fall as a result of liquidity challenges faced by companies from the region.
A global economic recession will further weigh on inflows to and outflows from the region. Economic growth in Asia is expected to stall to 0%.
South-East Asia
Following high inflows in 2019, South-East Asia has not been spared the impact of the pandemic.
South-East Asia, with FDI rising by 5% to a record level of $156 billion, continued to be the region’s growth engine in 2019. The growth was driven by strong investment mainly in Singapore, Indonesia and Viet Nam. The three countries received more than 80% of inflows in South-East Asia in 2019.
Robust investment from Asian economies, United States and within the Association of Southeast Asian Nations (ASEAN) pushed up inflows. Manufacturing and services continued to underpin inflows to South-East Asia.
FDI flows to some ASEAN member States (e.g., Myanmar, the Lao People’s Democratic Republic and Thailand) fell. Investment to Malaysia was flat.
Economics
Asia’s slow rate of vaccination is a thorn in the region’s economic recovery
Southeast Asia has been hit badly. Daily infections for Indonesia, Thailand, Vietnam are at their worst, on a seven-day moving average. The Philippines and Malaysia are not far off their daily infection peaks reached in the second quarter of 2021.
Last week was tough for the Asia-Pacific region. Many countries responded to stubbornly elevated daily infections by extending or tightening social distancing measures.
(more…)
Tourism
TAT expects 850 billion baht ($25.7 bln) in tourism revenue after successful reopening
The Tourism Authority of Thailand (TAT) has set this year’s revenue target at 850 billion baht, 300 billion of which will come from 3 million international visitors and the remaining 550 billion from the domestic market.
BANGKOK (NNT) – Following the launch of the Phuket Sandbox tourism scheme on July 1st this year, many foreign tourists moved by the warm hospitality of the people of Phuket, are looking forward to visiting other provinces, such as Chiang Mai and Bangkok.
(more…)
Asia’s slow rate of vaccination is a thorn in the region’s economic recovery
Southeast Asia has been hit badly. Daily infections for Indonesia, Thailand, Vietnam are at their worst, on a seven-day moving...
TAT expects 850 billion baht ($25.7 bln) in tourism revenue after successful reopening
The Tourism Authority of Thailand (TAT) has set this year’s revenue target at 850 billion baht, 300 billion of which...
Download 1xBet mobile and play all over the world
Placing profitable bets or playing in a casino is now possible comfortably even without being tied to a computer. It...
3 ways Asia can recover from the COVID-19 pandemic faster
Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors...
Thailand’s Vaccine Strategy: What went wrong?
Questions are being asked, and not answered, over the decision to rely almost entirely on Siam Bioscience, a local, palace-owned...