Advertisement
Business

2017 to be tough for investments

Advertisement

A report has predicted that global investment climate faces a stormy outlook this year largely driven by uncertainties influenced by political risks in some parts of the world including Europe, the US and China.

The report has been released by FDI Intelligence and authored by Jacopo Dettoni and Sebastian Shehadi. It makes reference to the vote for Brexit in the UK and the election of Donald Trump as US President as some of the events in 2016 which heightened political risk and consequently weighing on cross border investment everywhere.

“There is no doubt that 2016 will go to the history books as one of the most eventful political years on record. All of these events resonated deeply in the minds of investors, creating great uncertainty over the future of trade and investment in their respective countries, regions and, eventually, in the world as whole—an uncertainty that will not fade overnight,” the report said.

Advertisement

The report quotes James Zhan, Director of Investment and Enterprise at Unctad, as saying the weak aggregate demand, policy uncertainties and geopolitical risks experienced in 2016 are expected to continue into 2017.

Zhan said global greenfield FDI was five percent lower in terms of project numbers, in the first 10 months of 2016 when compared with the same period in 2015, according to figures from greenfield investment monitor FDI Markets.

Looking forward, the report predicts moderate recovery in 2017.

Advertisement

Africa came in as the world’s second largest regional recipient of greenfield FDI with $85.5 billion in the first 10 months of 2016, which represents a leap forward from the $57.8 billion recorded in the same period of 2015, FDI Markets figures show.

“Some countries will keep doing quite well, such as Rwanda or Mauritius, or even Ethiopia, despite some of the political issues,” the report quotes Celestin Monga, chief economist at the African Development Bank as saying. On the other hand, other countries such as Nigeria are shown facing difficulties and negative growth due to declining oil prices.

“As importantly, “more and more countries, from Senegal to Rwanda, are copying the strategy that Mauritius successfully used” in developing labour-intensive industries, as opposed to capital-intensive industries in which they have less comparative advantage,” Monga said.

In its latest Business Climate Survey, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) indicated that outlook for anticipated levels of investment, production and employment looks gloomy.

MCCCI said the economy faces many fundamental problems that need to be addressed before any meaningful economic development can take place.

The survey showed Business Confidence Index (BCI) further dropping in 2016 to 58.5 points in 2016 from 58.5 losing 6.5 index points.

BCI is a qualitative index of scores of enterprises’ assesment of current as well as future expectations of business climate indicators. These indicators include current performance, expected business performance, employment outlook and investment outlook.

Meanwhile, the Reserve Bank of Malawi (RBM) expects the economy to rebound in 2017 forecasting domestic economic activity to grow by 5.6 percent. However, the central bank also warned that external pressures like the expected fuel price rising, slowdown in the regional economy and the Brexit are expected to impact on Malawi’s financial sector and trade.

In 2016, RBM projected the economy to grow by 5.1 percent but later revised growth to 2.9 percent.

RBM attributed the slowdown in economic activity in 2016 to contraction in agricultural productivity following the prolonged spell of El Nino.

According to the Central Bank, erratic water and power supply continue to threaten production and economic activity in the country.

RBM also said financial stability risks arising from macroeconomic developments are likely to remain moderate.

Advertisement
Show More
Advertisement

Related Articles

Back to top button
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker