Latest news with #RebecaGrynspan
Mint
13-07-2025
- Business
- Mint
Rajrishi Singhal: India must probe the reasons behind rising outward FDI flows
Gift this article A general sense of despair pervades the universe of foreign direct investment (FDI), with flows from one country to another ebbing markedly in 2024. Three separate reports have independently lamented the sharp fall in FDI and concluded that this decline spells trouble particularly for developing countries, which are dependent on foreign investment for enhancing industrial capacity, upgrading infrastructure, modernizing technology and expanding their stock of renewable energy assets. All four factors are critical for economic growth, apart from reducing dependence on fossil fuels. A general sense of despair pervades the universe of foreign direct investment (FDI), with flows from one country to another ebbing markedly in 2024. Three separate reports have independently lamented the sharp fall in FDI and concluded that this decline spells trouble particularly for developing countries, which are dependent on foreign investment for enhancing industrial capacity, upgrading infrastructure, modernizing technology and expanding their stock of renewable energy assets. All four factors are critical for economic growth, apart from reducing dependence on fossil fuels. Waning FDI flows hold critical implications even for the Indian economy, specifically due to the rising tide of outflows and Indian industry's growing preference for overseas investment destinations. Also Read: India's FDI inflows offset by outflows: Blip or worry? The annualWorld Investment Report 2025 from the United Nations Conference on Trade and Development (UNCTAD), states that FDI flows fell 11% in 2024, a second straight year of decline, and the prognosis for 2025 is equally disheartening due to 'high investor uncertainty." However, what shines through in the report was a doubling of project values in the digital sector. But this was not without its drawbacks. According to UNCTAD secretary-general Rebeca Grynspan, 'Despite more than $500 billion in greenfield investment in the digital economy into developing countries over the past five years, this investment is heavily concentrated in a few countries. Many structurally weak and vulnerable economies remain marginalized, constrained by inadequate digital infrastructure, limited digital skills and policy and regulatory uncertainty." The second data release emanated from the Organisation for Economic Cooperation and Development (OECD), a club for rich nations. The OECD report states that while the US, Luxembourg and Canada were the world's top three FDI destinations during 2024, flows to the G-20's non-OECD economies (which includes India) declined by 30%. China witnessed a decline for the third consecutive year. Also Read: Rework India's investment treaty framework to attract FDI flows A third report,Foreign Direct Investment in Retreat: Policies to Turn the Tide, was released by the World Bank. The report, using recent project announcements, states that greenfield FDI to emerging and developing economies (the dominant form of investment flows into these economies) declined 25% during 2024. This indicates a growing distaste for setting up new manufacturing facilities in these markets. The report also nails down the 2008 financial crisis as a turning point for global FDI: flows as a share of global GDP declined from 5% in 2007 to below 1% during both 2023 and 2024, the lowest since the start of this century. All three reports point to heightened trade tensions, policy uncertainty and a breakdown of global value chains due to rising protectionism as the primary reasons for waning FDI. These factors have contributed to a weakening of the global macroeconomic backdrop, further imperilling the near-term outlook for FDI flows. This has an unmistakably adverse impact on India, though the picture may look different at a gross level. Let's unpack this. Among FDI recipients, the UNCTAD report places India at 15th rank in 2024, marginally up from 16th position in 2023. And while greenfield activity was reportedly strong in India (led by semiconductor and metal projects), international project finance inflows contracted by 37%. What makes India's FDI data remarkable, however, is the country's growing outflows. The first category is of existing FDI investors cashing out and taking funds back home. A proportion of these outflows has overseas investors liquidating local holdings in favour of domestic groups. For example, Walt Disney sold its Indian operations (Star India) to Jio and private-equity firm Advent International relinquished its 100% stake in Bharat Serum to Mankind Pharma. However, given the lack of granular data, it becomes difficult to pin down the exact ratio of domestic versus overseas buyouts. Also Read: India's FDI decline seems easier to explain than reverse What seems more disconcerting, though, is Indian businesses increasingly favouring overseas investments rather than putting their money to work at home. Outflows under this category in 2024 jumped 75% over the previous year. Compared with 2016-17, outflows in 2024-25 were more than four times larger. According to the World Bank's report: 'Among the push factors that tend to encourage FDI outflows from the source country are its weak growth prospects, macroeconomic risks, political instability, rising production costs, and deterioration of the regulatory environment." The growing volume of outflows seems counter-intuitive, since the government has initiated policies to both facilitate FDI inflows—such as higher FDI caps in a number of sectors (insurance and defence, for instance) and liberalized rules for construction or single brand retail trading—and expedite domestic manufacturing (such as its production-linked incentive scheme). Typically, the largest sources of outward FDI are rich economies with capital account convertibility, barring conduits like the Netherlands or Singapore. For example, the US and Japan occupy the top two spots in the outward FDI league tables, while China, with partial convertibility, is in third place. India, in contrast, is still a low-middle income economy and the rupee's internationalization is lower than the renminbi's. It thus becomes imperative for the Indian government to probe the reasons behind India Inc's reluctance to invest at home, despite all the incentives, low interest rates and generous tax breaks. The author is a senior journalist and author of 'Slip, Stitch and Stumble: The Untold Story of India's Financial Sector Reforms' @rajrishisinghal Topics You May Be Interested In
Scoop
02-07-2025
- Business
- Scoop
Drowning In Debt: New Forum In Sevilla Offers Borrowers Chance To Rebalance The Books
2 July 2025 The Borrowers' Forum is being hailed as a milestone in efforts to reform the international debt architecture, supported by the UN and emerging as a key part of the Sevilla Commitment outcome document. 'This is not just talk - this is execution,' said Egypt's Minister of Planning and Economic Development, Dr Rania Al-Mashat. ' The Borrowers' Forum is a real plan, driven by countries, to create a shared voice and strategy in confronting debt challenges.' Rebeca Grynspan, Secretary-General of UN Trade and Development (UNCTAD), said developing nations often face creditors as a united bloc while negotiating alone. 'Voice is not just the ability to speak — it's the power to shape outcomes. Today, 3.4 billion people live in countries that pay more in debt service than they do on health or education.' The forum – one of 11 recommendations by the UN Secretary-General's Expert Group on Debt – will allow countries to share experiences, receive technical and legal advice, promote responsible lending and borrowing standards, and build collective negotiating strength. Its launch addresses long-standing calls from the Global South for more inclusive decision-making in a debt system dominated by creditor interests. 'Silent but urgent' Zambia's Foreign Minister, Mulambo Haimbe, told journalists the initiative would foster 'long-term partnerships, mutual respect and shared responsibility' and expressed his country's willingness to host an early meeting. Spain's Finance Minister Carlos Cuerpo described the current debt crisis as 'silent but urgent,' and called the Forum a 'Sevilla moment' to match the Paris Club of creditors, created nearly 70 years ago. UN Special Envoy on financing the 2030 Agenda Mahmoud Mohieldin said the forum was a direct response to a system that has kept debtor countries isolated for too long. ' This is about voice, about fairness – and about preventing the next debt crisis before it begins.' The launch comes at a time of rising debt distress across the developing world. The commitment – known in Spanish as the Compromiso de Sevilla – adopted by consensus at the conference, includes a cluster of commitments on sovereign debt reform. Alongside support for borrower-led initiatives, it calls for enhanced debt transparency, improved coordination among creditors, and the exploration of a multilateral legal framework for debt restructuring. It also endorses country-led debt sustainability strategies, debt payment suspension clauses for climate-vulnerable nations, and greater support for debt-for-nature and debt-for-climate swaps – albeit with stronger safeguards and evidence of impact. Frustration over 'missed opportunity' to tackle debt crisis Civil society groups on Wednesday sharply criticised the adopted outcome in Sevilla, calling it a missed opportunity to deliver meaningful reform of a global debt system that is crippling many developing nations. Speaking at a press briefing inside the conference, Jason Braganza of the African Forum and Network on Debt and Development (AFRODAD) said the final outcome document adopted on day one – the Sevilla Agreement – fell far short of what was needed. ' This document did not start with much ambition and still managed to be watered down,' he said. 'Nearly half of African countries are facing a debt crisis. Instead of investing in health, education and clean water, they're paying creditors.' Mr. Braganza praised the leadership of the African Group and the Alliance of Small Island States, which fought for a UN Framework Convention on sovereign debt. 'False solutions' Although that ambition was not fully realised, he welcomed a small breakthrough in the form of a new intergovernmental process that could lay the groundwork for future reform. Civil society leaders also warned of the dangers of so-called 'debt-for-climate swaps', with Mr. Braganza calling them 'false solutions' that fail to provide genuine fiscal space for developing nations. Tove Ryding of the European Network on Debt and Development (Eurodad) echoed those concerns, saying: 'We are told there's no money to fight poverty or climate change — but there is. The problem is economic injustice. And the outcome of this conference reflects business as usual.' She highlighted the progress made on a new UN Tax Convention as proof that determined countries can bring about real change, adding: 'If only we had a tax dollar for every time we were told this day would never come.' Commitment bears fruit for public health To help close gaps in access to public services and policies, and to address healthcare cuts that could cost thousands of lives, Spain on Wednesday launched the Global Health Action Initiative aimed at revitalising the entire global health ecosystem. The initiative, which will channel €315 million into the global health system between 2025 and 2027, is supported by leading multilateral health organisations and more than 10 countries. Raising prices, saving lives Later at the conference, the UN health agency unveiled a new drive to help countries tackle chronic disease and raise vital funds by increasing taxes on tobacco, alcohol, and sugary drinks. The 3 by 35 Initiative urges governments to boost the real prices of these products by at least 50 per cent by 2035. ' Health taxes are one of the most efficient tools we have,' said Dr. Jeremy Farrar, WHO Assistant Director-General. ' They cut the consumption of harmful products and create revenue governments can reinvest in health care, education, and social protection.' Noncommunicable diseases like heart disease, cancer, and diabetes now account for more than three-quarters of all deaths worldwide. WHO says a one-time 50 per cent price rise could prevent 50 million premature deaths over the next 50 years, while generating $1 trillion in public revenue. Between 2012 and 2022, nearly 140 countries raised tobacco taxes, proving such change is both possible and effective.
Fibre2Fashion
23-06-2025
- Business
- Fibre2Fashion
Global FDI falls 11% in 2024 amid mounting uncertainty: UNCTAD
Global foreign direct investment (FDI) fell by 11 per cent in 2024 to $1.49 trillion, marking the second consecutive year of decline and confirming a deepening slowdown in productive capital flows, according to the UN Trade and Development (UNCTAD). Although headline FDI appeared to rise by 4 per cent to $1.5 trillion, the increase was largely due to volatile financial conduit flows through several European economies, which often serve as transfer points for investments, as per the World Investment Report 2025 released by UNCTAD. Investment dropped sharply across developed economies, particularly in Europe. Developing countries appeared broadly stable, with a marginal 0.2 per cent rise. However, this concealed a deeper crisis, as capital is stagnating or bypassing sectors that matter most—such as infrastructure, energy, and technology. Global FDI fell 11 per cent to $1.49 trillion in 2024, marking a second year of decline, as per UNCTAD. While Africa saw strong growth due to a large project, Europe's inflows plunged. Investment in key sectors like energy and infrastructure dropped. Digital FDI rose 14 per cent but remained concentrated. UNCTAD urges coordinated reforms to close a $4 trillion sustainable development financing gap. 'Too many economies are being left behind not for a lack of potential—but because the system still sends capital where it's easiest, not where it's needed,' said Rebeca Grynspan, UN Trade and Development secretary-general . 'But we can change that. If we align public and private investment with development goals and build trust into the system, domestic and international markets will bring scale, stability and predictability. And today's volatility can become tomorrow's opportunity.' Regionally, Africa surged 75 per cent due to a major Egyptian project. Asia retained its top position despite a 3 per cent dip, and Latin America declined by 12 per cent. Among vulnerable groups, FDI rose in least developed countries (9 per cent) and small island states (11 per cent) but fell 10 per cent in landlocked nations. Investment in development-critical sectors showed worrying signs. International project finance dropped 26 per cent, with renewable energy (-31 per cent), transport (-32 per cent), and water/sanitation (-30 per cent) most affected. Despite a 14 per cent rise in digital economy FDI—driven by Information and Communication Technology (ICT) and semiconductors—80 per cent of new digital projects were concentrated in just 10 countries, leaving many developing nations behind due to gaps in infrastructure, policy, and skills, added the release. UNCTAD stressed that bridging the estimated $4 trillion annual financing gap for sustainable development in developing economies requires coordinated reforms and long-term, inclusive capital. It proposed a seven-point agenda focusing on better governance, digital infrastructure, innovation ecosystems, skill-building, and global digital investment standards. Fibre2Fashion News Desk (SG)
Zawya
20-06-2025
- Business
- Zawya
Global FDI rose 4% in 2024 to $1.5trln: UNCTAD
GENEVA - The United Nations Conference on Trade and Development (UNCTAD) revealed a decline in global foreign direct investment (FDI) value by 11 percent, marking a second consecutive year of contraction. According to UNCTAD's World Investment Report 2025, issued Thursday in Geneva, global FDI increased by 4 percent in 2024 to reach US$1.5 trillion. However, this rise was driven in part by volatile financial flows through several European economies, which often act as investment transit hubs. The report stressed that the findings underscore the urgent need to reshape investment and finance systems to support inclusive and sustainable growth. The report comes ahead of the Fourth International Conference on Financing for Development, which will bring world leaders together to address the widening gap between capital flows and development needs. UNCTAD noted that investment fell sharply in developed economies, particularly in Europe, while flows to developing countries remained broadly stable. Rebeca Grynspan, Secretary-General of UNCTAD, said fragmentation and volatility are distorting investment flows, adding that the investment landscape in 2024 was shaped by geopolitical tensions, trade fragmentation, and intensifying competition in industrial policies. She explained that these dynamics, coupled with elevated financial risks and uncertainty, are redrawing global investment maps and undermining long-term investor confidence. The report highlighted a 22 percent decline in FDI to developed economies, including a 58 percent plunge in Europe, while North America bucked the trend with a 23 percent increase, led by the United States. Regional trends varied: Africa saw a 75 percent surge in FDI, driven by a single large project in Egypt. Excluding this, inflows rose by 12 percent, supported by investment facilitation and regulatory reforms. Asia maintained its position as the leading recipient region. Despite a slight 3 percent decline overall, Southeast Asia recorded a 10 percent rise in FDI to US$225 billion — the second-highest level on record. In contrast, Latin America and the Caribbean saw a 12 percent drop in total inflows, although announcements of new projects rose in key markets such as Argentina, Brazil and Mexico. The report affirmed that the Middle East maintained strong FDI inflows, supported by economic diversification efforts in the Gulf region. FDI flows among structurally vulnerable economies varied: they increased by 9 percent in least developed countries (LDCs) and by 14 percent in small island developing states (SIDS), but declined by 10 percent in landlocked developing countries (LLDCs). Across all three groups, investment remained heavily concentrated in a small number of countries.
Free Malaysia Today
20-06-2025
- Business
- Free Malaysia Today
Global investment decline may worsen due to tariffs, warns UN trade agency
UNCTAD secretary-general Rebeca Grynspan said investment that has a real impact on jobs and infrastructure is going down. (EPA Images pic) GENEVA : Global foreign direct investment (FDI) fell for the second consecutive year in 2024, with fears this year could be even worse as trade tensions rock investor confidence, the UN agency for trade and development said in a report published today. FDI transactions, which do not include several European conduit economies, declined by 11%, indicating a significant reduction in actual productive investment activity, according to the UN Conference on Trade and Development (UNCTAD). Geopolitical tensions and trade fragmentation contributed to lower investment last year as they created uncertainty, which UNCTAD secretary-general Rebeca Grynspan described as a 'poison' for investor confidence. 'We are even more worried about the picture in 2025…we already feel that investment is halted…tariffs are affecting growth,' Grynspan told Reuters, with short-term risk management being prioritised over long-term investment. UNCTAD said its outlook for international investment in 2025 was negative due to trade tensions. Early data for the first quarter of 2025 shows record low deal and project activity. When several European conduit economies – which act as intermediary hubs where investments temporarily pass through before reaching their final destinations – are included, the data showed that FDI increased by 4% to US$1.5 trillion. However, UNCTAD noted that this figure masks the reality that much of this investment is merely passing through these jurisdictions and was not productive. 'We see a very worrying tendency…Investment that has a real impact on jobs and infrastructure is going down,' she said. Developed economies suffered a sharp drop in investment, with a 58% decrease in Europe. North America, however, observed a 23% increase in FDI, led by the US, while countries in Southeast Asia reached the second-highest level of FDI on record with a 10% rise, representing US$225 billion. Though capital inflows in developing countries were broadly stable, UNCTAD observed that capital was not being injected into crucial job-creating sectors such as infrastructure, energy and technology.
