U.S. Is Top Investment Destination Despite Falling Inflows

livemint.com:

The U.S. was the top destination for businesses looking to expand internationally last year but the inflow of capital fell as companies around the world cut down on foreign investment amid rising uncertainty and borrowing costs. Foreign investment in the U.S.

fell to $285 billion in 2022 from $388 billion in 2021, mainly due to a sharp fall in foreign purchases of American companies, according to United Nations data released Wednesday. The U.S. could notch up further gains in the near future as foreign companies take advantage of the Inflation Reduction Act, which offers subsidies for investing in renewable-energy projects and producing energy from renewable sources.

The U.N. said it was too early to register the effects of the legislation in the data. Globally, new overseas investments by businesses fell 12% from 2021 to $1.3 trillion, and are unlikely to rebound strongly this year given that executives are “uncertain and risk averse," the U.N.

said. This made last year the worst for foreign investment since 2009 with the exception of 2020, when the Covid-19 pandemic struck. Still, the decline was smaller than the U.N.

had feared given the scale of the economic uncertainties facing businesses, including the lingering effects of the pandemic, surging food and energy prices, and the U.S.-China economic rivalry. “The prospects for international investment looked extremely gloomy last year," said Rebeca Grynspan, secretary-general of the U.N.’s Conference on Trade and Development. “In the end, international investment flows did suffer, but proved more resilient than expected." Developed economies in general registered a 37% drop in investment flows.