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The Warsaw Voice » Business » September 30, 2009
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Global FDI Shrinks
September 30, 2009   
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1.47 million people in Poland are having problems meeting their financial obligations on time; their combined debt stands at zl.12.06 billion, according to credit market analysts InfoMonitor.

Foreign direct investment (FDI) worldwide has declined as a result of the ongoing financial and economic crisis, according to The World Investment Report 2009: Transnational Corporations, Agricultural Production and Development from the United Nations Conference on Trade and Development (UNCTAD).

In this annual study of global investment trends released in September, UNCTAD says that prospects for global FDI inflows are gloomy. As a result of the crisis, FDI inflows are expected to fall from $1.7 trillion in 2008 to less than $1.2 trillion in 2009. Recovery is expected in 2010, but it will not be strong, the report says.

According to UNCTAD, the value of global FDI inflows will reach $1.4 trillion next year and then approach $1.8 trillion in 2011.

In 2008, FDI inflows to the European Union dropped by 40 percent year on year to $503 billion. This was chiefly due to a fall in FDI inflows to Britain by over 47 percent, Germany by almost 56 percent, Italy by over 57 percent, and France by more than 25 percent.

FDI inflows to Poland totaled $16.5 billion in 2008, almost 27 percent less than in 2007 when they were record high. But despite this decrease, investment in Poland, Romania, the Czech Republic and Bulgaria accounted for 77 percent of the total value of FDI inflows to the EU last year.

A total of 353 greenfield projects were carried out in Poland last year, 6.6 percent of all greenfield projects in Europe. "Poland compares well with other new EU members; it still has the largest pool of foreign investment of all new member states," said Zbigniew Zimny, the report's consultant and UNCTAD representative in Poland. FDI outflows from Poland approached $3.6 billion in 2008 and $4.8 billion in 2007.

The ongoing crisis has hit transnational corporations hard, the report says. In 2008 and early 2009, they recorded sharp drops in revenues and had to suspend investment plans and lay off workers. Some even went bankrupt. But despite that, corporations from developed countries still account for around 84 percent of business organizations conducting international transactions. Chinese and Russian corporations are the largest investors in developing and transition countries.

Transnational corporations operating in sectors that are less sensitive to business cycles and where demand has remained relatively stable are likely to drive the next FDI boom, the report says.
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