Impact on Foreign Investment due to Coronavirus.
                     Impact on Foreign Investment 
due to Coronavirus
Global disruption
 The COVID-19 pandemic has created massive 
uncertainty in global capital flows. Governments 
might be wise to introduce short-term 
protections, but they must not be over-cautious. 
The post-crisis winners will open early to foreign 
investment.
Source: Google Images
What’s happening?
 All over the world, foreign investors are 
navigating uncharted waters. The COVID-19 
pandemic is leaving not only desolation for the 
lives that are being lost, but also many questions 
about the post-coronavirus economy, such as 
how global investment flows will behave as the 
emergency clears.
Source: Google Images
Importance of Foreign Investment
 Foreign Investment has historically been a 
barometer of health of international companies, 
and their ability to bring about global growth. 
With the current freezing over of foreign 
investments, a spectre looms on the horizon 
once the health emergency subsides, a deeper 
economic recession to confront.
Source: Google Images
Huge losses
 The UN’s trade and development arm 
(UNCTAD) recently revised its forecasts about 
the effects of COVID-19 on global FDI flows 
from a conservative -5 to -15% drop, to a 
decisive -30 to -40% contraction. Even without 
further downward revisions, those losses are 
potentially more dramatic than at any time in 
modern history.
Protectionism
 Many countries are turning towards safeguarding 
the economy. The COVID-19 crisis has already 
wiped off trillions of dollars off companies’ 
valuations. It may well be in a country’s best 
interest to put up temporary barriers on 
investment as a protective measure, to avoid 
foreign acquisition of companies at dirt cheap 
rates.
Source: Google Images
Situation in Asia
 After foreign investors turned net sellers and 
pulled out $6.4 billion from the Indian equity 
markets largely due to the COVID-19 outbreak 
and ensuing risk-averse environment, a US 
Congressional report said that foreign investors 
have pulled out an estimated $26 billion from 
developing Asian economies and over $16 billion 
out of India.
Source: Google Images
Panic in the market
 The uncertainty over the gravity of the 
pandemic's impact on the global economy and 
financial markets worldwide triggered a flight to 
safety among foreign investors as they rushed 
to exit from relatively riskier investment 
destinations, such as emerging markets like 
India
Source: Google Images
Signs of straining relations
 Differences in policy approaches are straining 
relations between countries that promote 
nationalism and those that argue for a 
coordinated international response. It is also 
straining relations between developed and 
developing economies and challenging alliances, 
and raising questions about the future of global 
leadership
Source: Google Images
Disruptions continue
 Disruptions to industrial activity in China 
reportedly are causing delays in shipments of 
computers, cell phones, toys, and medical 
equipment. The factory output in China, the 
United States, Japan, and South Korea all declined 
in the first months of 2020. Reduced Chinese 
agricultural exports, including to Japan, are 
leading to shortages in some commodities. 
Source: Google Images