Inflows of global foreign direct investment (FDI) rose by 2% in the first half of 2011 compared with the second half of 2010 according to the latest Global Investment Trends Monitor released by UNCTAD. The increase maintains the 5% moderate recovery of 2010.
The effects of the financial crisis however are precipitating a slowing down of growth in FDI according to preliminary estimates of cross-border mergers and acquisitions and greenfield investment. The outlook is predicted to remain optimistic with FDI flows expected to be close to pre-crisis levels over the next twelve months. The emphasis on crisis management is making policy makers more cautious diverting attention away from the need for more private investment to generate growth and jobs.
In the first half of 2011 more than half of global FDI was directed towards developing and transition economies as transnational corporations are still directing their investment to emerging markets. Developed economies experienced a 4% decline in FDI in the first half of 2011.
Showing posts with label emerging economies. Show all posts
Showing posts with label emerging economies. Show all posts
Monday, 24 October 2011
Wednesday, 15 September 2010
OECD Economic Outlook Is Uneven Growth
The May OECD Economic Outlook says growth is gradually increasing in the OECD area but at different rates across different regions, especially in emerging-market economies. Risks in global recovery may even greater now. The upturn is in large part due to keeping markets open, pulling the economy out of recession.
The emerging economies are experiencing a re-opening of imbalances. China, however, is an example of strong domestic demand preventing a large external surplus rising to pre-crisis levels. Appropriate policies are still required to address global inequalities. The G20 is given as being potentially important in identifying and implementing a set of policies for more sustained and balanced growth. International collaboration will also be required for progress in financial market reform.
Even though growth has been taking place, unemployment has increased by over 16 million in the OECD area over the last two years but it is less than expected. Employment growth prospects in some European economies and Japan are weak. A jobs recovery could take place with appropriate cost-effective labour market and social policies that support workers in danger of long-term unemployment.
Instability in sovereign debt markets and overheating in emerging market economies are significant risks that may jeopardise the recovery. Monetary policy should be returned to normal as soon as possible and support removed. Exit strategies must take account of fiscal consolidation so as not to put pressure on interest rates. Much of the turbulence has been calmed by the response of euro-area governments and the European Cenral Bank though underlying weaknesses remain and structural adjustments will have to be made.
Euro area architecture will have to be strengthened considerably to get rid of doubts about the viability of monetary union raised by the sovereign debt crisis. Domestic policies should be strengthened for more competitiveness but fiscal discipline is also important. Spending cuts must preserve the cost-effectiveness of programmes helpful to growth. Consolidation strategies must include structural reforms for growth.
Reforms of labour and product markets should be implemented for an increase in output, innovation and to prevent increases in unemployment.
The emerging economies are experiencing a re-opening of imbalances. China, however, is an example of strong domestic demand preventing a large external surplus rising to pre-crisis levels. Appropriate policies are still required to address global inequalities. The G20 is given as being potentially important in identifying and implementing a set of policies for more sustained and balanced growth. International collaboration will also be required for progress in financial market reform.
Even though growth has been taking place, unemployment has increased by over 16 million in the OECD area over the last two years but it is less than expected. Employment growth prospects in some European economies and Japan are weak. A jobs recovery could take place with appropriate cost-effective labour market and social policies that support workers in danger of long-term unemployment.
Instability in sovereign debt markets and overheating in emerging market economies are significant risks that may jeopardise the recovery. Monetary policy should be returned to normal as soon as possible and support removed. Exit strategies must take account of fiscal consolidation so as not to put pressure on interest rates. Much of the turbulence has been calmed by the response of euro-area governments and the European Cenral Bank though underlying weaknesses remain and structural adjustments will have to be made.
Euro area architecture will have to be strengthened considerably to get rid of doubts about the viability of monetary union raised by the sovereign debt crisis. Domestic policies should be strengthened for more competitiveness but fiscal discipline is also important. Spending cuts must preserve the cost-effectiveness of programmes helpful to growth. Consolidation strategies must include structural reforms for growth.
Reforms of labour and product markets should be implemented for an increase in output, innovation and to prevent increases in unemployment.
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