Bangkok--16 Feb--Standard & Poor's Ratings
Standard & Poor's Ratings Services today issued a report that finds that the flow of foreign direct investment (FDI) into emerging market economies (EMEs) should continue over the next few years. The report, entitled "Recent And Expected FDI Trends In Emerging Market Economies," says that these FDI inflows reflect robust global growth, deepening globalization trends, rising competition and subsequent pressures for mergers and acquisitions, and ongoing improvements in the business environments of many EMEs.
According to Standard & Poor's credit analyst Helena Hessel, the rates of growth are unlikely to be as impressive as in the past three years (2004-2006), which followed a severe three-year drop (2001-2003) and reflected a particularly conducive global economic environment. "Nevertheless, we project that, in the absence of a significant geopolitical backlash, total global FDI inflows will reach US$1.5 trillion in 2008, surpassing the peak of US$1.4 billion achieved in 2000 and rising to US$1.7 trillion by the end of this decade," said Mrs. Hessel.
The report notes that, despite a continuing slump in FDI to developed countries, the impressive growth of inflows to EMEs resulted in a recovery in global FDI inflows in 2004. However, this trend has since reversed and the growth of FDI inflows to developed economies strongly outperformed that to EMEs in 2005-2006.
Mrs. Hessel explained that the tendency of faster-growing inflows to developed countries compared to EMEs is expected to continue over the next few years. "The commodity boom that underpinned considerable FDI to resource-rich EMEs has reached a plateau," noted Mrs. Hessel. "In addition, since the concentration of FDI into EMEs is relatively high, their absorptive capacity will diminish, reflecting the completion of large privatization programs (e.g., in Egypt, Morocco, and some Eastern European countries), maturation of their economies, declining competitiveness, and various institutional and business constraints (in Turkey and India)," she concluded.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
David Wargin, New York (1) 212-438-1579
[email protected]
Analyst Contact:
Helena Hessel, New York (1) 212-438-7349