UNCTAD: FDI in Iran Drops 11% in 2020

Foreign direct investment into Iran declined almost 10% in 2020 compared to the year before, according to the United Nations Conference on Trade and Development (UNCTAD).
Based on data published in the World Investment Report 2021, the UN agency put Iran’s FDI inflow at $1.34 billion in 2020, which was down 11% compared to $1.508 billion in 2019.
UNCTAD, which was established in 1964 as a permanent intergovernmental body and as part of the UN secretariat dealing with trade, investment and development issues, also records and discloses information on outward FDI flow.
FDI is an investment made by a firm or individual in one country into business interests located in another country in the form of a controlling ownership.
Iran had seen FDI inflows of $3.37 billion and $5.01 billion in 2016 and 2017 after the landmark 2016 nuclear deal.
The nuclear agreement opened the way for a growing number of foreign companies flocking to the Iranian market untapped after years of pent-up demand as a result of years of international sanctions related to its nuclear energy program.
However, the flow fell to $2.37 billion in 2018, mostly under the influence of the Trump administration's unilateral withdrawal from the 2015 agreement.
Iran's direct investment in other countries is estimated at $78 million in 2020 -- 8% lower than the $85 million a year before.
UNCTAD estimated the FDI inward stock of Iran in 2020 at $58.7 billion, and said its FDI outward stock was estimated at $4.05 billion that year.
According to the report, Iran's FDI inward stock amounted to $28.95 billion and $2.597 billion in 2010 and 2000, respectively, and for FDI outward stock at $1.71 billion and $411 million.
FDI stocks measure the total level of direct investment at a given point in time, usually the end of a quarter or of a year. The outward FDI stock is the value of the resident investors’ equity in and net loans to enterprises in foreign economies.
The inward FDI stock is the value of foreign investors’ equity in and net loans to enterprises resident in the reporting economy. FDI stocks are measured in USD and as a share of GDP.
The Covid-19 crisis has caused a severe fall in global foreign direct investment), with investment flows dropping by a third – from $1.5 trillion in 2019 to $1 trillion in 2020, according to the new UNCTAD report.
The report found that the coronavirus pandemic rolled back progress made in ensuring that the least developed countries and those with weaker economies have access to foreign investments.
The study also shows that the drop in FDI was the severest for developed economies, where it fell by 58%. Flows to Europe fell by a whopping 80% as economies hunkered down by coronavirus restrictions and lockdowns. North America saw a decline of 42%.
While FDI in developing economies dropped by a moderate 8% due to resilient flows in Asia – inflows in China actually increased by 6% to $149 billion. Investments in infrastructure projects in developing countries were hit particularly hard.