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Foreign Direct Investment Into South Africa Falls Nearly 50% In A Year
24 Oct 2012 by Bearded Wiseman in Business, Economics, Finance
This can’t be linked to the recent strike turmoil in the country, but it’s still a reflection of heightened global economic uncertainty. It should also serve as a wake up call to those involved in wasteful spending, but it probably won’t.
The strike turmoil will no doubt have an effect on foreign direct investment, but we won’t be able to know just how large that effect will be for some time still.
These latest facts emerged in a United Nations report yesterday, and revealed that foreign direct investment flows to South Africa fell by 43,6% in the first half of 2012, when compared to the same period last year. Or, put differently: inflows to South Africa fell to $1,7 billion in the first six months of 2012, from $3 billion in the first half of 2011.
Foreign direct investment to Africa as a whole rose by 5%, and global foreign direct investment fell 8%.
Sub-Saharan Africa has experienced huge growth over the last decade, and another report says that the IMF has predicted “the continent’s GDP will grow by 5% this year, down from a predicted 5,4% but still much faster than almost anywhere else.”
We will likely see further decline, but our neighbours are doing well, and that means that they will also likely see investment increases as confidence in South Africa erodes.
The IMF forecasts South African GDP growth of 2,6% this year, and recently cut its 2013 growth forecast to 3% from a July projection of 3,3%, due to its close links to struggling Europe. FDI flows to Africa grew 5.1% to $23.1bn in the first half of 2012 after three consecutive years of decline, the UNCTAD report said, citing a return of investor confidence to North Africa, especially Egypt.
Globally, FDI inflows reached $668 billion in the first half of 2012, down 8% from the same period in 2011, due to a decline in inflows to the United States and the BRIC countries – Brazil, Russia, India and China.
However, China was still the world’s largest recipient of FDI, with inflows of $59,1 billion in the first half.
The UN report also noted that for the first time, developing countries accounted for half of global foreign direct investment inflows.
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