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 For the first time in five years, companies listed macroeconomic
instability as their biggest constraint for investing in emerging
markets over the next three years, according to the report from the
World Bank's Multilateral Investment Guarantee Agency.
"The persistent global economic uncertainty appears to have tainted
the overall mood, with economic pessimism underpinning the expected
stagnant FDI levels," MIGA said in the report.
The findings suggest that the global recovery is still finding its
footing after the 2007-2009 financial crisis.
In its latest global economic snapshot in October, the International
Monetary Fund cut its world growth forecasts for the sixth straight
time in two years, warning about a sluggish expansion in the
developing world.
Overseas financing into developing countries is set to fall 4.5
percent next year after rising 2 percent in 2013, the MIGA report
said. However, at around $600 billion a year, FDI to emerging
markets is close to quadruple the levels seen a decade ago, it
added.
Growing investments into sub-Saharan Africa and South Asia are a
bright spot, although Europe and Central Asia are seeing declines.
But MIGA said most of the 459 companies it surveyed about their
activities in emerging markets were not planning to withdraw or
cancel existing investments.
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MIGA aims to encourage FDI into emerging markets by protecting
private investors from such political risks as war and sovereign
default.
It said the market for political risk insurance expanded 33 percent
last year to $100 billion, a historic high, and is on track for
similar growth this year, even as FDI is falling.
Investors are most concerned about instability in the Middle East
and North Africa, expropriations and legal disputes with governments
in Latin America, contract renegotiations in countries with natural
resources and general capital constraints, MIGA added.
[© 2013 Thomson Reuters. All
rights reserved.]
(Reporting by Anna Yukhananov. editing by Andre Grenon) Copyright 2013 Reuters. All rights reserved. This material may not be published,
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