24/06/2008 - Foreign direct investment (FDI) outflows from OECD countries in 2007 leapt to a record USD 1.82 trillion from USD 1.2 trillion in 2006 but are projected to fall sharply in 2008, according to estimates from the OECD. If a slowdown in merger and acquisitions observed in the first half of 2008 continues, FDI outflows could fall to USD 1.14 trillion.
FDI inflows to OECD countries rose to USD 1.37 trillion in 2007, up from USD 1.05 trillion in 2006 and up slightly from the previous record of USD 1.29 trillion set in 2000. But FDI inflows are projected to fall back in 2008 to USD 1.035 trillion.
The projected fall in FDI outflows from OECD countries in 2008 will also impact developing countries.
Based upon the historical relationship between developing country inflows and OECD outflows, the projected 37% drop in OECD outflows in 2008 could result in a decline of around 40% for developing country inflows to around USD 276 billion from their 2007 record of USD 471 billion.
The new records set in 2007 for OECD inflows and outflows were helped by the fall in the US dollar against most other major currencies. (In addition to greenfield investment and mergers and acquisitions, FDI includes reinvested earnings, cross-border loans and capital transactions between related firms.)
For further information, journalists should contact Michael Gestrin of OECD’s Investment Division (tel. + 33 1 45 24 76 24).