Lockdown measures hurting existing projects, says report.

ISLAMABAD -- Global foreign direct investment (FDI) flows are forecast to decrease by up to 40 per cent in 2020 from 2019's value of $1.54 trillion, according to UNCTAD's 'World Investment Report 2020'.

This would bring FDI below $1tr for the first time since 2005. In addition, FDI is projected to decrease by a further 5pc to 10pc in 2021 and to initiate a recovery in 2022, the report says.

'The outlook is highly uncertain. Prospects depend on the duration of the health crisis and on the effectiveness of policies mitigating the pandemic's economic effects,' said UNCTAD Secretary-General Mukhisa Kituyi.

The pandemic is a supply, demand and policy shock for FDI. The lockdown measures are slowing down existing investment projects. The prospect of a deep recession will lead multinational enterprises (MNEs) to reassess new projects. Policy measures taken by governments during the crisis include new investment restrictions.

In Pakistan, FDI recovered in 2019, growing 28pc to $2.2 billion after a deep fall of 30pc in 2018 as the country faced balance-of-payment challenges. The growth was driven by equity investments in the energy, financial, and textiles industries, with major investors from China and the United Kingdom, report says. FDI to South Asia grew 10pc to $57bn. The growth was driven largely by a rise in investment in India, which further relaxed investment barriers in mid-2019. Inflows to Bangladesh, an important FDI recipient in South Asia, fell by 56pc to $1.6bn. The decline reflects an adjustment from a record-high level in 2018.

The export-oriented apparel industry remains an important FDI recipient, with major investors from the South Korea, Hong Kong, China and China. In 2020, the sector is expected to be severely affected by both...