U.S. Leads FDI Ranking, Sustainability Bonds Increase
GENEVA — The U.S. was the top destination in 2021 for new commitments in greenfield foreign direct investments in the retail apparel sector with declared new projects valued at $3.1 billion, a United Nations report said.
The new projects included outlays by fashion brands such as Honey Birdette, Canada Goose, Duer, Kanuk and Pajar, U.N. analysts said, noting the second most popular destination was China with $734.8 million, followed by Canada with $572 million; the U.K. with $392.1 million; Spain with $350.8 million; France with $204 million, and Italy with $183.6 million.
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Other popular host countries for new greenfield FDI projects in the retail sector included the Netherlands with $163.2 million; Germany with $154.4 million; the United Arab Emirates with $104.1 million; Japan with $84.5 million, and Australia with $78 million in new declared projects.
Worldwide in 2021 greenfield projects in the apparel retail sector were valued at $7.7 billion — still below pre-COVID-19 pandemic levels –– and were a more preferred choice for foreign investors than greenfield FDI in textiles, apparel and leather manufacturing, estimated at only $1.6 billion, according to the U.N. Conference on Trade and Development’s “World Investment Report, 2022.”
Overall, the report said, global FDI in 2021 increased 64 percent to $1.58 trillion, but it projects global FDI flows this year “will likely move on a downward trajectory.”
In 2021, the U.S. was the top host economy and attracted FDI inflows of $367 billion, up on $151 billion posted in 2020, followed by China with $181 billion.
Preliminary data for the first quarter of 2022, it noted, shows greenfield project announcements down 21 percent, cross-border M&A activity down 13 percent and international project finance deals down 4 percent.
Rebeca Grynspan, UNCTAD secretary-general, said at a news conference Thursday, “The global environment for international business and cross-border investment has changed dramatically in the last three months. The war in Ukraine — added to the pandemic and climate crisis — is rapidly increasing investor uncertainty.
“Global value chains are greatly disrupted, consumers are worried, and interest rates are rising. Fears of a recession are also high and rising investor uncertainty will put significant downward pressure on global FDI in 2022,” she added.
On a brighter note, the report said that, globally, sustainability-themed financial products –– such as green bonds, social bonds, and mixed sustainability bonds — amounted to $5.2 trillion in 2021, up 63 percent from the year before, and the number of sustainable funds reached 5,932 by the end of 2021. But it critically observed that most of these funds are “self-labelled, and the lack of consistent high-quality data to assess their sustainability credentials and impact has given rise to greenwashing concerns and credibility issues.”
International cooperation is needed, it said, “to enhance interoperability and harmonization of regulations and standards across countries to facilitate international investment.”
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