UNITED NATIONS, June 24 (Reuters) - The volume of global foreign direct investment and cross-border mergers and acquisitions levels plunged by more than half in the first quarter of 2009, the United Nations said on Wednesday.
According to the United Nations Conference on Trade and Development (UNCTAD), the amount of FDI inflows slumped 54 percent while M&A plummeted by 77 percent in the first quarter of this year versus the same period a year earlier.
"If the first quarter trend continues, projections for the whole of 2009 are for global FDI inflows to drop by close to half," UNCTAD said in a statement.
According to data collected from 57 countries, which accounts for 60 percent of world inflows, the first quarter of this year saw inflows of $136 billion versus $294 billion in the same period a year ago.
Cross-border M&A was $56.7 billion in the first quarter of 2009 versus $246.9 billion in the first quarter of 2008. The total for 2008 was $673.2 billion.
"While developed countries are mainly responsible for the fall in FDI in 2009 -- they have experienced a nearly 60 percent decline -- unlike in 2008, developing countries and transition economies are also this time experiencing declines," UNCTAD said.
Developing nations are expected to see FDI drop as much as 25 percent, compared with as much as 40 percent for transition economies.
UNCTAD said preliminary results from a survey of transnational corporations (TNCs) found nearly two thirds anticipate a decline in their FDI expenditures this year.
TNCs may rely on short-term non-equity entry modes into markets such as partnerships or licensing to develop their international business, UNCTAD said.
Protectionism is a big concern among TNCs, UNCTAD said, noting it may "discourage or restrict domestic firms from investing abroad or from injecting capital into their existing foreign affiliates."
"So far, however, investment measures taken by countries in response to the crisis appear to have been mostly nondiscriminatory in nature," UNCTAD said. (Reporting by Daniel Bases; Editing by James Dalgleish)