LONDON, UK; WASHINGTON, DC, December 8, 2011 – Heightened global risk
perceptions in the aftermath of the financial crisis, fueled by
sovereign credit risk in the developed world and political crises in
the Middle East and North Africa, have increased investor\’s concerns,
according to a new report by the World Bank\’s Multilateral Investment
Guarantee Agency. However, the report, World Investment and Political
Risk, notes that investors are more optimistic over the medium term.
A survey of global investors conducted for the report finds they are
\”cautiously optimistic\” about their investment plans in the next 12
months. They are more confident over the next three years: nearly 75
percent of corporate respondents have plans to expand in developing
countries over this period.
MIGA\’s survey shows that events in the Middle East and North Africa
have had a negative effect on foreign direct investment (FDI), but a
significant majority of global investors said they have not changed
their investment plans. However, while investors appear willing to
ride out this period of turmoil and uncertainty, they are also ready
to downsize plans should political instability intensify and become
prolonged.
Overall, the report notes that the recorded growth of private capital
flows to developing countries, including FDI, is moderating, but is
expected to regain speed in the medium term – corroborating the
sentiment found in the investor survey. \”This uncertain economic
landscape aside, developing countries are expected to grow more than
twice as fast as high-income economies over the next few years,\” notes
MIGA\’s Executive Vice President Izumi Kobayashi. \”This continued
growth, together with stronger and more business-friendly
environments, should enhance their appeal to savvy investors
worldwide.\”