China was the largest recipient of FDI, attracting an estimated $70 billion in inflows in the first half of the year, followed by the UK with $65.5 billion, the US with $46.5 billion, The Netherlands at $44.8 billion, Australia with $36.1 billion, Singapore got $34.7 billion and Brazil received $25.5 billion, it said.
Global foreign direct investment fell by 41 per cent in the first half of 2018, to an estimated $470 billion from $794 billion in the same period of 2017, mainly due to large repatriations by the US parent companies of accumulated foreign earnings from their affiliates aboard following tax reforms, the report said.
Overall, the global financial picture is "gloomy", said James Zhan, UNCTAD's Director, Division on Investment and Enterprise.
The decline in global FDI is mainly owing to recent tax reforms implemented by US President Donald Trump's administration that led to big firms in the US to bring home earnings from abroad principally from Western European countries.
Other factors have contributed to this year's "huge difference in repatriation" of overseas profits by US multinationals, Zhan said.
These include uncertainty about the detail and impact of tax reform and the potential impact of unresolved international trade disputes; such as the tit-for-tat tariffs imposed by the US and China, Zhan added.
In contrast to the overall decline in foreign investment, the report highlights a 42 per cent increase in so-called "greenfield" projects to $454 billion.
These initiatives can involve building operations in a foreign country from scratch and they are seen an indicator of future trends, Zhan said, adding that investment in this sector had been at "relatively low levels" in the same period last year.
The report noted that while the fall in foreign direct investment had happened mainly in richer nations, including Ireland (down $81 billion) and Switzerland (down $77 billion), developing economies saw FDI flows declining "only slightly" in the first half of the year by four per cent to $310 billion compared with 2017.
This includes developing Asia - down four per cent - to $220 billion - in the same period, driven mostly by a 16 per cent decline in investment in East Asia.
Latin America and the Caribbean saw a six per cent drop in investment, amid uncertainty over upcoming elections that were offset by higher commodity prices, the report said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.