Global Foreign Investment Declined By 28 Percent In Second Quarter: OECD Study

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OECD Secretary-General Angel Gurria briefs the media on the dangers of the U.S. political impasse to the world economy during the IMF and World Bank's 2013 Annual Fall Meetings in Washington on October 10, 2013. Reuters

After two consecutive quarters of increases, global foreign direct investment dropped by 28 percent during the second quarter of 2013, a return to the downward trend that started in the first quarter of 2012, according to a report by the Organization for Economic Cooperation and Development.

Outgoing investment by OECD economies declined by 20 percent to $155 billion, while inflowing investment to OECD member states declined by 26 percent to $137 billion.

The European Union saw outgoing investment fall by 82 percent, from $44 billion to $8 billion. Among EU nations, Germany saw particularly severe declines in outflows, which the report said was primarily a factor of German affiliates shouldering more intercompany debt.

Nineteen OECD countries had negative foreign investment outflows or inflows, or both, according to the report.

A precipitous drop in outflow investment from Russia accounted for most of the decline among non-OECD G-20 countries. In the first quarter, investment outflows from Russia equaled $54 billion, but by quarter two it had dropped to a paltry $1 billion. Brazil and China also saw declines in outflowing investment.

Three countries received about half of all foreign direct investment: China attracted $61 billion, or 21 percent, of the total; the United Kingdom received $41 billion; and the United States received $38 billion. 

Among countries seeing inflow increases: Australia saw a rise to $12 billion from $10 billion, the U.S. saw inflows rise from $29 billion to $38 billion, and the U.K. saw them rise to $41 billion from $34 billion.

Mexico recorded its highest level of investment inflows, $18 billion, up from $5 billion the previous quarter, which was boosted by Belgian-based Anheuser-Busch’s acquisition of Grupo Modelo.

Indonesia, Brazil, China and South Africa received between 4 percent and 28 percent more foreign investment than in the previous quarter. 

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