Publication: The Impact of COVID-19 on Foreign Investors: Evidence from the Second Round of a Global Pulse Survey
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2020-09
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2020-10-19
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The COVID-19 pandemic has had a profound impact on the global economy, triggering the deepest global recession of the past eight decades. Together, the crisis and public health response have caused both a severe supply shock in the form of reduced worker availability and supply chaindisruptions, and a massive demand shock as consumption became restricted and confidence fell. The World Bank forecasts a 5.2 percent contraction in global GDP in 2020, including a 2.5 percent decline in emerging markets and developing economies (World Bank 2020).
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âSaurav, Abhishek; Kusek, Peter; Kuo, Ryan; Viney, Brody. 2020. The Impact of COVID-19 on Foreign Investors: Evidence from the Second Round of a Global Pulse Survey. © World Bank. http://hdl.handle.net/10986/34638 License: CC BY 3.0 IGO.â
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Publication The Impact of COVID-19 on Foreign Investors(World Bank, Washington, DC, 2020-12)As the COVID-19 crisis extends into the second half of 2020, the outlook for both the pandemic and the associated economic crisis remains highly uncertain. In this environment, multinational enterprises (MNEs) need to weather a prolonged economic downturn while also navigating government policy responses to the pandemic and updating investment plans for an uncertain future. Given the importance of foreign direct investment (FDI) to the crisis and recovery, especially for developing countries, the World Bank Groupâs Global Investment Climate Unit is conducting quarterly pulse surveys of MNE affiliates throughout 2020 to gauge the pandemicâs effect on foreign investors. According to previous rounds of the survey, four in five MNE affiliates experienced reduced revenue and profits, and three in four experienced a decline in supply chain reliability in the first quarter of 2020 (Saurav, Kusek, and Kuo, April 2020). The adverse impacts became near-universal in the second quarter of 2020, with over 90 percent of MNEs experiencing adverse effects (Saurav, Kusek, Kuo, and Viney, September 2020). A third round of the quarterly pulse survey, reflecting the third quarter of 2020, was administered in October and November 2020. The survey results show that the pandemicâs adverse effects remained widespread for MNE affiliates in the third quarter, with only limited improvements expected in the fourth quarter. While these survey results may not be generalizable to all developing countries, they are directionally indicative of MNEsâ experiences in developing countries.Publication The Impact of COVID-19 on Foreign Investors(World Bank, Washington, DC, 2021-03)A fourth round of the quarterly pulse survey, reflecting the last quarter of 2020, was administered in February 2021. This round of the survey included new questions reflecting on 2020, and the impacts of the crisis on technology adoption and environmental sustainability trends. The reportâs findings will help provide policy makers and businesses with an updated picture of the effects of the COVID-19 crisis on MNEs and the global outlook for foreign investment. The reportâs findings will help provide policy makers and businesses with an updated picture of the effects of the COVID-19 crisis on MNEs and the global outlook for foreign investment.Publication The Impact of COVID 19 on Foreign Investors(World Bank, Washington, DC, 2021-06)As the Coronavirus (COVID-19) pandemic enters its second year, foreign investors can see light at the end of the tunnel as economic conditions improve. Results from the latest round (Q1 2021) of World Bank Groupâs quarterly pulse surveys of Multinational Enterprise (MNE) affiliates suggests that most firms are still operating below full capacity. The pandemicâs adverse effects on MNEs in developing countries continued to ease in the first quarter of 2021 (Q1 2021). Impacts remained widespread with 93 percent experiencing at least one adverse impact, but fewer firms report negative demand, output, revenue, and profit impacts (relative to Q1 2020) than in prior survey rounds. The average magnitude of these impacts was also more limited and continued to ease from Q4 2020. The longer-term outlook for foreign investment in developing countries remains subdued. Overall, 92 percent of firms report that their foreign parent had no plans to change (increase or decrease) the companyâs level of investment over the next 1-3 years. Uncertainty about future demand is the key factor holding investment back, but policy and regulatory restrictions are also a factor for almost half of firms. Survey results confirmed that almost all MNE affiliates have increased their adoption of digital technologies for remote working, e-commerce, and supply chain management in response to the pandemic. Half of MNE affiliates also report increasing their focus on sustainability and decarbonization of products and services, with foreign parent companies again playing a critical role. While these survey results may not be generalizable to all developing countries, they are directionally indicative of MNEsâ experiences in developing countriesPublication The Impact of COVID-19 on Foreign Investors(World Bank, Washington, DC, 2020-04)To assess the impact of the COVID-19 (Coronavirus) pandemic on multinational enterprises affiliates in developing countries, the World Bank Group conducted a foreign investor pulse survey in March 2020. The survey covered three components: the actual effect of the pandemic on businesses in the past three months (January - March 2020), the likely effect of the pandemic in the next three months (forward-looking for April - June 2020), and areas for policy support measures. This analytical note reports the results of the survey.Publication World Bank Investor Confidence Survey(World Bank, Washington, DC, 2021-11-08)As economic conditions begin to improve in the wake of the COVID-19 pandemic, foreign investors face new challenges that are impeding a complete recovery. Results from the latest round (Q2 2021) of World Bank Groupâs quarterly pulse survey of Multinational Enterprise (MNE) affiliates suggests that despite output and demand reaching pre-pandemic levels on average, most firms are still facing adverse effects. The share of firms reporting at least one adverse impact of the pandemic continued to fall in Q2 to 73 percent compared to 93 percent in Q1 2021. Within the ten business dimensions measured, employment and investment saw the largest improvement from Q1, but new challenges are emerging. Worker productivity and liquidity have emerged, alongside input cost pressures and supply chain reliability, as areas of concern for a complete recovery. MNEsâ future investment plans have become slightly more optimistic, providing early signs of an improvement in the investment outlook. The share of surveyed MNEs expecting to increase investment over the next three years has reached a pandemic high (21 percent) â driven by changes or expected changes in regulations and policies for foreign investors as well as insourcing of production. At the same time, uncertainty remains the primary factor limiting the appetite of firms to invest. Results also show over half of surveyed firms were forced to lay off workers during the pandemic, but recruitment plans over the next three years indicate an expected net increase in workforce. MNEs are increasingly looking for highly educated workers with strong managerial, analytical, and problem-solving skills. While these survey results may not be generalizable to all developing countries, they are directionally indicative of MNEsâ experiences in developing countries.
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