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Foreign direct investment (FDI) flows will continue to grow this year worldwide, yet at a slower pace, according to a report from global management consulting firm A.T. Kearney released yesterday.
"Despite diminished global economic optimism and concern over the US economy, global executives will likely continue to increase their investment abroad," said the FDI Confidence Index report.
An annual survey of top executives of 135 global companies conducted by the US-based consulting firm revealed that optimism about the global economy has declined substantially over the past year. Yet, the report said, despite concerns over world economic prospects, 85 percent of top decision-makers plan to maintain or increase their investments abroad.
"Investors worldwide are afraid the US economy has the flu," the report said. A soft landing for the US economy is the most important factor affecting investors' decisions this year, the survey indicated.
Still, the United States retains its position as the most preferred investment destination for global executives, according to the survey, with China and Brazil displacing the U.K. as the second most attractive target for near term FDI.
This year, investors' attention has been driven primarily toward the robust emerging markets Brazil, China, Mexico and India, the report said. In fact, senior executives of the world's largest firms intend to direct three quarters of first-time FDI commitments toward developing economies.
China's increased attractiveness and mounting interest for first-time investments in Asia invigorate the region's future prospects, the report said. Singapore leaped from 21st to 13th position in the FDI Confidence Index this year, while Taiwan followed suit and ranked 19th, moving up four spots from last year's position.
Twice as many Asian executives expressed greater optimism toward the global economy than other investors overall. The report said that Asia's positive outlook may largely reflect its own economic recovery and the region's prospects for long-term growth.
(Eastday 02/14/2001)
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