Greenfield FDI and cross-border mergers and acquisitions (M&A) deals had been generally volatile in the years prior to Covid-19. Investment trends, unlike some other macroeconomic factors, do not tend to show year-on-year growths. However, between 2015 and 2019, there did appear to be a general upturn in both greenfield projects and M&A deals. Once Covid-19 struck, both metrics declined substantially.

We estimate that greenfield FDI projects increased by 14–18% in 2021, falling just short of the numbers reached in 2019. This is after a 18% fall in project numbers in 2020. Greenfield FDI, generally, takes longer to rebound compared with M&A. Lockdowns implemented by governments made site selections much more difficult in 2020 and, in some cases, impossible. During times of recession greenfield investors are much more cautious. On the contrary, M&A investors can potentially pick up some bargains during recession periods as target company revenues decline. According to GlobalData’s deals database, the number of M&A deals (domestic and cross-border) increased by a massive 30% in 2021, having been relatively stable between 2019 and 2020. Acquisitions were a key driver of growth.

The Covid recovery and FDI

For most countries, the case fatality rate of Covid-19 (deaths per cases) has been declining since vaccination programmes were rolled out. The newest strain of the virus, Omicron, also seems to have milder symptoms for those vaccinated or previously infected. This has allowed many economies to reopen. Even the hardest-hit sectors such as such as tourism began to rebound in 2021. International travel is also picking up. Proof of vaccinations are still required for travel to most countries, but the uptake of vaccinations in most countries has generally been good.

North America, Latin America and Asia-Pacific are the leading regions in terms of Covid-19 vaccinations. In each of these regions, more than three-quarters of the population have had at least one vaccine dose. This is in stark contrast to Africa, where less than one-in-five have had at least one Covid vaccine. Africa is also struggling with its FDI recovery. The UN Conference on Development and Trade's (UNCTAD) Investment Trends Monitor identifies greenfield FDI into Africa in 2021 at only half the level it was in 2019, and international project finance deals are down 30% compared with 2019. In general, developed economies have driven FDI growth. M&A was a bigger instrument of growth compared with greenfield FDI.

Macro factors that impact FDI: GDP

Many agencies were predicting a slowdown in economic growth in 2022 compared with 2021, even before Russia's invasion of Ukraine. In January 2022, the International Monetary Fund (IMF) revised its world output projections for 2022 to 4.4% – down 0.5% from its previous forecast in October 2021. Further revisions are expected to be announced soon. Forecasts from GlobalData in March 2022 predict real global GDP to grow by about 3.4% in 2022. Ukraine is expected to fall by 10% and Russia by 8.6%. However, real GDP is not taking into account inflation, which is riding precariously high in early 2022.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

As economies began to reopen in 2021, many countries experienced stark rebounds. However, this led to the aforementioned inflationary pressures as well as persistent supply chain backlogs, which dent growth. Another concern is the threat of further lockdowns. In March 2022, a spike in Covid cases in Hong Kong caused neighbouring Shenzhen to go into lockdown. Although perhaps now seen as overly cautious – in that other countries are unlikely to follow such a strict reaction ­– it does demonstrate that Covid cannot yet be considered ‘over’.

As greenfield FDI and GDP are highly correlated, and given that a significant amount of FDI is market seeking, FDI levels will be highly impacted should the global economy’s growth outlook continue to diminish.


Global trade values reached a record high of $28.5trn in 2021. Trade in both goods and services grew. UNCTAD estimates the trade level in 2021 was approximately 25% higher than 2020 and 13% higher compared with 2019. Previous studies from the OECD have shown that FDI "stimulates the growth of exports from countries of origin and consequently this investment is complementary to trade". Trade growth was witnessed across almost all sectors except for transport equipment. Rising commodity prices contributed significantly to the increase in global trade value. Soaring energy costs, persistent supply chain issues, subdued economic growth and the Ukraine-Russia war will likely see trade volumes slow down in 2022.


Companies have been innovating their way through the Covid pandemic. According to GlobalData’s Patent Analytics, the number of patents granted has been increasing throughout the 2019–21 period, while patent filings have remained relatively consistent. The key themes of these patents have been climate change, industrial automation, digitalisation, cybersecurity, renewable energy and healthtech. Such areas have come to the forefront of investors' minds during the pandemic and are likely to be key FDI growth sectors.

Long-term impacts of the Covid-19 pandemic on FDI

The Covid pandemic has caused (or allowed for) companies to reassess their expansion strategies. In our FDI predictions for 2021, we discussed nearshoring becoming more popular. The Ukraine-Russia war may cause the demand for nearshoring to continue as many foreign investors have pulled out of Russia.

Covid-19 has also revolutionised the way in which the world works. Numerous polls have suggested working from home (in some capacity) is likely to be a new normal. More than three-quarters of people surveyed by GlobalData suggested some form of working from home was the way forward. With climate change targets becoming a primary feature for governments, the reduction in pollution from employees working from home would be a welcome benefit.

Companies have also been reassured that the quality of work has remained high throughout the pandemic. In FDI terms, this will allow companies to target top talent anywhere in the world, without the historical need for that person to work in an office at strictly regimented hours.

In turn, this should reduce the demand for offices going forward. Companies will still have to maintain a physical presence, but they will not need as much space. Hot-desking was already becoming more popular pre-Covid. The ability to operate at a significantly smaller capacity, given some staff will be working from home or travelling, will be welcomed by companies looking to reduce costs.

As many have had to work from home at some point during the pandemic, the world has become much more digitalised. Companies will continue to capitalise on their digital investments. Key themes of AI and machine learning as well as quantum computing will become more prominent in future FDI projects. Therefore, we will also see a continued pattern of smaller FDI projects (jobs created per project) as automation becomes key.

Investments are now being placed under more scrutiny than ever before. Many countries have upped their FDI regulations in response in company acquisitions that are seen as a security threat. Although there is the potential for many restrictions to ease, it does not seem like this will happen in the short term. The reason for further FDI screening has been heavily attributed to Chinese acquisitions. These regulations are unlikely to significantly affect greenfield FDI project numbers, but hey will have a harder impact on M&A deals in sensitive sectors. The pandemic has also made countries aware of the fact that they must be more possessive over prized companies that can ease any difficulties in uncertain times, reducing the reliance on other countries and supply chains.

Covid-19 caused a huge shock to FDI levels. However, the fall in the number of FDI projects in 2020 was quickly rectified in 2021. As the world begins to plan for what a post-Covid era may look like, the Ukraine-Russia war may curb any thoughts of a sustained, fast recovery. Other geopolitical concerns such Brexit and the US presidency still linger, while enduring supply chain issues, inflationary pressures and stricter FDI regulations will add to a worrisome outlook for 2022. Nevertheless, our forecast of 6% FDI project growth in 2021, made in December 2021, may still be achievable if these concerns can be minimised as the business world looks to ignite once more.