France hit by fall in foreign investment: OECD

23rd June 2005, Comments 0 comments

PARIS, June 23 (AFP) - Foreign direct investment in industrialised countries slumped by 11.3 percent last year, with particularly sharp declines in France and Germany, the OECD reported on Thursday.

PARIS, June 23 (AFP) - Foreign direct investment in industrialised countries slumped by 11.3 percent last year, with particularly sharp declines in France and Germany, the OECD reported on Thursday.

In 2004, total FDI in the countries of the Organisation for Economic Cooperation and Development, which includes the world's 30 richest nations, dropped to USD 407 billion (EUR 337 billion), compared with USD 459 billion in 2003, the OECD said.

Europe's two biggest economies suffered the hardest blows. In Germany, foreign investors withdrew about USD 39 billion, reversing the inflow of USD 27 billion in 2003. In France FDI was about half of what it was in 2003.

On the other hand, investments by OECD countries in the rest of the world rose 12.6 percent to USD 668 billion.

Net investment by OECD nations - most of which went to developing countries -- hit a record level at USD 261 billion, the Paris-based group said.

China got a large serving from the investment pot, some USD 55 billion last year. Asian financial centers such as Hong Kong and Singapore also received hearty helpings from investors.

India too has become more attractive to investors, a trend that started in the late 1990s. The OECD put FDI at USD 5.3 billion in 2004, while noting that the figure was a low-end estimate as Indian statistics are less inclusive than most.

Given the current trends, the OECD predicted that both inflows and outflows of foreign investment in OECD countries would increase between 10-15 percent this year, pointing out that "the return to the market of merger and acquisition activity in 2004 is continuing in 2005," the OECD said.

In the world's biggest economy, FDI from the United States reached a record USD 252 billion, more than USD 100 billion more than in 2004.

This boost in FDI was due in part to the weakness of the US currency but also reflected the "strong interest among US companies in acquiring corporate assets abroad," the OECD said.

Russia has remained a steady destination for FDI, mainly in hydrocarbons and retailing sectors. But the OECD said that there was growing interest from "foreign producers of consumer good to establish production sites in Russia."

Other areas drawing more interest from outside investors include South America, which "seems to be climbing out of the trough that followed the Argentine crisis," the OECD.

Investment in Argentina, Brazil and Chile last year was at levels nearly twice that in 2003.

At the same time, some Latin American countries were gaining as outward investors too.

Large companies in Mexico and Brazil were engaging in regional integration through investment "and then moving to develop truly international corporate networks," the OECD said.

Chinese enterprises too have undertaken "strategic" investments overseas, mainly to get access to raw materials, the OECD said, adding that the sums involved are still small by international comparison.

Copyright AFP

Subject: French news

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