(Ecofin Agency) - The current outbreak of coronavirus will have a huge impact on the global economy this year. According to the UN Conference on Trade and Development (Unctad), it may cut the inflow of Foreign Direct Investments worldwide by 15%, compared to estimates last January.
In a report last week, the UN body indicated that “with scenarios of the spread of the epidemic ranging from short-term stabilization to continuation throughout the year, the downward pressure on FDI will be -5% to -15% (compared to previous forecasts projecting marginal growth in the FDI trend for 2020-2021).” UNCTAD also found that impact will be uneven across regions with heaviest effects on countries that are most affected by the epidemics and those that take the most drastic measures to refrain its spreading.
New earnings forecasts of the top 5,000 listed companies have been revised down amid the coronavirus crisis, and UNCTAD observed that Africa will be the less affected region with new estimates only down 1% compared to the initial ones while the world average is down 9%. The continent has recorded the lowest number of covid-19 cases so far, but this may change due to the significant traffic with its largest trading partner, China.
“Covid-19 will affect market efficiency and resource-seeking investment alike. Market-seeking investment and FDI projects in extractive industries could be delayed worldwide as a result of negative demand shocks,” UNCTAD said.
Moutiou Adjibi Nourou