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| In 2022, investment flows into China reached a record high of 189 billion USD. (Source: Reuters) |
According to a report on July 5 by the United Nations, in 2022, the US will still be the top destination for businesses wanting to expand their investment abroad.
However, investment flows have declined as companies cut back on overseas investments due to uncertainty and rising borrowing costs.
Foreign investment in the US will fall from $388 billion in 2021 to $285 billion in 2022, largely due to a sharp decline in foreign acquisitions of US companies.
In the near future, investment in the US could rebound as foreign companies take advantage of provisions in the Inflation Reduction Act that provide subsidies for investments in renewable energy projects.
Globally, new corporate overseas investments fell 12% to $1.3 trillion last year from 2021 and are unlikely to rebound sharply this year as executives are risk-averse. 2022 is the worst year for overseas investment since 2009, excluding 2020.
However, the decline is still smaller than the level the United Nations fears due to the scale of economic uncertainties facing businesses, including the lingering effects of the Covid-19 pandemic, rising food and energy prices, and economic competition between the United States and China.
Developed economies as a whole saw a 37% drop in investment flows in 2022. Although still behind the US, China recorded its highest ever inflow of $189 billion, up 5%. Much of that increase came from European companies.
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