Investment into emerging markets to fall in 2014: World Bank

Overseas financing into developing countries is set to fall 4.5% next year after rising 2% in 2013: World Bank]

 

The World Bank Group building in Washington DC . The World Bank findings suggest that global recovery is still finding its footing after the 2007-2009 financial crisis. Photo: Bloomberg

Washington: Foreign direct investment (FDI) into emerging markets should decline next year because of persistent concerns about the global economy, the World Bank’s political risk insurance arm said on Thursday.

For the first time in five years, companies listed macroeconomic instability as their biggest constraint for investing in emerging markets over the next three years, according to the report from the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

“The persistent global economic uncertainty appears to have tainted the overall mood, with economic pessimism unpderinning the expected stagnant FDI levels,” MIGA said in the report.

The findings suggest that the global recovery is still finding its footing after the 2007-2009 financial crisis.

In its latest global economic snapshot in October, the International Monetary Fund (IMF) cut its world growth forecasts for the sixth straight time in two years, warning about a sluggish expansion in the developing world.

Overseas financing into developing countries is set to fall 4.5% next year after rising 2% in 2013, the MIGA report said. However, at around $600 billion a year, FDI to emerging markets is close to quadruple the levels seen a decade ago, it added.

Growing investments into sub-Saharan Africa and South Asia are a bright spot, although Europe and Central Asia are seeing declines.

But MIGA said most of the 459 companies it surveyed about their activities in emerging markets were not planning to withdraw or cancel existing investments.

ABHISHEK KUMAR

PGDM 1ST

SOURCE- LIVEMINT.COM