The agency called for debt relief to give developing countries fiscal space to invest in clean energy transition.
The report also said that fossil fuel subsidies around the world amounted to a record U$1 trillion in 2022 – eight times the value of subsidies provided to renewable energy.
“Fossil fuel subsidies represent a disincentive to investment in the energy transition because they make it more challenging for renewable energy to compete, especially when it does not receive the same level of support,” it said.
“Although phasing them out is complex, particularly for developing countries, doing so would help encourage investment in renewable energy.”
FDI DOWN IN 2022
UNCTAD’s report said that after a steep drop in 2020 and a strong rebound in 2021, overall global foreign direct investment (FDI) declined by 12 per cent in 2022, to US$1.3 trillion.
“The slowdown was driven by the global polycrisis: The war in Ukraine, high food and energy prices, and debt pressures,” it said.
International project finance and cross-border mergers and acquisitions were especially affected by tighter financing conditions, rising interest rates and uncertainty in capital markets, the report said.
UNCTAD expects downward pressure on global FDI to continue in 2023.
FDI in developing countries increased by 4 per cent to US$916 billion, and represents more than 70 per cent of global flows – a record share.
However, this growth is concentrated in a small number of large emerging economies.
“FDI flows to many smaller developing countries are stagnant, while flows to the least-developed countries fell by 16 per cent from an already low base,” said Grynspan.
The top 10 host economies for FDI inflows in 2022 were the United States, China, Singapore, Hong Kong, Brazil, Australia, Canada, India, Sweden and France.
Source: CNA
