Rebuilding investor confidence in times of uncertainty

Abstract

In today’s world, the current COVID-19 epidemic has shown itself to be a terrible force, wreaking havoc on people's lives, jobs, and investor confidence. Within months of the outbreak, 2/3rd of multinational investors in developing nations report supply chain disruptions, revenue decreases, and production reductions. This year, the foreign direct investment (FDI) flows are expected to drop by more than 40 percent globally. Greater predictable trade and investment policies, according to the Global Investment Competitiveness Report, might help developing countries and their governments might attract more foreign investment flows needed to maintain financial stability in their country and also contribute to economic recovery from the current COVID-19 pandemic's consequences. By avoiding policies like protectionism, grabbing and building new opportunities from evolving FDI norms and changing supply chain patterns, and fostering global collaboration, developing nations can harness Foreign Direct Investment (FDI) for a stronger economic recovery. The latest Global Investment Competitiveness Report is constructed on two surveys: a large estimate of over two thousand four hundred global business leaders performed in the second half of 2019 in 10 large middle-income countries and a smaller "pulse" survey conducted in March and April 2020. The poll results, as well as the report's new worldwide database of regulatory risk, emphasise the need of government efforts in decreasing investor risk and boosting policy certainty in order to re-establish investor confidence. Most foreign investors were deferring investment choices even before the crisis, according to the surveys, because of the increased level of uncertainty surrounding trade and investment policy. Political support, stable macroeconomic environment, and favourable administrative regimes were cited by foreign investors as the top three investment decision considerations, surpassing low taxes, input costs and low labour, and easy access to natural resources.