Bureau van Dijk has updated its privacy policy effective June 30, 2020. You can review the updated privacy policy now.

Free trial

23 April 2020

Covid-19 re-shapes foreign direct investment

David East

Covid and FDI banner

Against the backdrop of pandemic, early indications signal significant declines in both equity forms of foreign direct investment. The United Nations Conference on Trade and Development (UNCTAD) estimates that FDI will decrease in the region of 30 to 40%. But it is not all gloom: many greenfield projects are still going ahead despite Covid-19, partially due to the long gestation period associated with greenfield investment, and partly to the opportunities crises present.

Innovative entrepreneurial firms will always uncover opportunities. During the financial crisis following 2008, we saw the likes of Airbnb, Pinterest, Uber and WhatsApp emerge. While today’s pandemic by its nature limits cross-border activity, businesses and governments seeking security of supply are likely to drive some re-engineering of supply chains following this coronavirus outbreak, favouring local rather than global suppliers. This creates new opportunities for businesses, and facilitates the adoption of the UN’s Sustainable Development Goals (SDGs).

This presents a number of opportunities for those on the front line of facilitating foreign direct investment, such as investment promotion agencies (IPAs) and economic development agencies (EDAs), to continue supporting businesses within their locale. While many IPAs and EDAs are rightly focusing on ‘aftercare’ and communications, they could also use this time to review their strategies.

Investment changes 2019-20

Orbis Crossborder Investment data from 1 February to 17 April 2019 compared with the same period in 2020 shows:

  • Greenfield FDI announced and completed projects: down 48%
  • Cross-border announced and completed mergers and acquisitions (M&A deals): down 34%
  • Venture capital: down only 9%

Covid FDI graph countries most impacted

Capital expenditure

Growth sectors

The outlook post-Covid

The full impact of this global pandemic is yet to be seen. Global M&A and greenfield FDI projects are already declining significantly. It would be unrealistic to expect any immediate rebound from the effects of increased market volatility, remote working, travel restrictions and social distancing, despite some markets beginning to ease such restrictions in an effort to breathe life into their economies.

Opportunistic acquisitions, particularly of companies significantly affected by ‘lockdowns’, are to be expected. However many countries and trading blocs are putting tougher FDI screening steps in place to prevent these takeovers and protect strategic assets and infrastructure.

Longer term, we expect to see an increase in protectionist policies and the re-engineering of global supply chains. The US, which is the key source market for FDI, has surpassed China with the highest number of known Covid-19 cases, and countries such as Singapore are already heading for recession. A return to growth in the next 12-18 months therefore seems unlikely. Business and the cross-border investment landscape will be changed forever post-Covid, the question is, to what extent?

David East

David East, Director of Product Strategy

An experienced cross-border investment professional, David East is currently Director of Product Strategy, Tax and Transfer Pricing, FDI and Economic products at Bureau van Dijk, a Moody’s Analytics company.

An experienced cross-border investment professional, David East is currently Director of Product Strategy, Tax and Transfer Pricing, FDI and Economic products at Bureau van Dijk, a Moody’s Analytics company.

bvdi white logo

How Bureau van Dijk can help you

Certainty is a highly-prized commodity in business. Data might be getting bigger all the time, but this only makes extracting value from it more difficult.

In capturing and treating private company information we aim to give you more certainty – and help you make better decisions and work more efficiently.



Our solutions are designed to help different business challenges and streamline your workflow. Many of our customers blend our information with their own internal data to get a more complete picture of the companies in their ecosystem.

Try our more certain approach –
welcome to the business of certainty.