ACCORDING to UNCTAD's World Investment Report 2019, Global FDI flows slid by 13% in 2018, to USD 1.3 trillion from USD 1.5 trillion the previous year - the third consecutive annual decline.

The contraction was largely precipitated by United States multinational enterprises (MNEs) repatriating earnings from abroad, making use of tax reforms introduced by the country in 2017, designed for that purpose.

Hardest hit by the earnings repatriation were developed countries, where flows fell by a quarter to $557 billion − levels last seen in 2004.

"FDI continues to be trapped, confined to post-crisis lows. This does not bode well for the international community’s promise to tackle urgent global challenges, such as abject poverty and the climate crisis," UNCTAD Secretary-General Mukhisa Kituyi said.

"Geopolitics and trade tensions risk continuing to weigh on FDI in 2019 and beyond," he cautioned.

The tax-driven fall in FDI, which occurred in the first two quarters, was cushioned by increased transaction activity in the second half of 2018. The value of cross-border merger and acquisitions (M&As) rose by 18%, fueled by United States MNEs using liquidity in their foreign affiliates.

Developing country flows managed to hold steady (rising by 2%), which helped push flows to the developing world to more than half (54%) of global flows, from 46% in 2017 and just over a third before the financial crisis.