Trade Horizons’ Market Entry Blog

2021 saw German companies investing $1.6 billion in Africa which is a drop from 2016-2020 at $9.7bn and much less than France or the UK. Headlines report the number should be higher – only 1% of Germany’s global FDI ends up in Africa. China’s investments increase 40x year on year, but that has not been without its own issues. We also read that the new EU initiative Global Gateway which would rival the Chinese Belt and Road initiative. The new Global Gateway would invest Euro 150 billion in the African market. We also read about Germany’s approach to Namibia to fund a Euro 10 billion green hydrogen fund which would ship clean energy to Europe. This would diversity the green energy supply chain away from China which dominates the market as a producer of materials such as solar panels. Since the Ukraine war Germany has reduced energy reliance on Russia drastically as of when Russia turned off the pipeline. Germany needs to import 5 million tonnes of green hydrogen in 2025 if green hydrogen is to work, and has approached major African nations.

In 2019 EU signed the ‘Mercosur’ trade pact with 4 South American countries Argentina, Brazil, Paraguay and Uruguay after 20 years of negotiations. The deal was reportedly held up due to Brazil’s former Prime Minster Bolsonaro’s poor preservation of the Amazon rainforest. Brazil’s new Prime Minister has said he will preserve the Amazon rainforest which EU chiefs have said would lead to the signing of the deal. However, Argentina’s President says the environment was an excuse and Brazil and Argentina did not agree to the terms which would damage the car industry in those two countries. He says the deal is unbalanced and would severely affect the car industry but also would not give South America access to sell agricultural products into Europe. Argentina and Brazil want to reopen negotiations.

Japan UK trade deal, EU Canada trade deal rammed through EU Parliament, Malaysia rejects CPTPP, EU sustainability reporting new rules, Medtech in Ireland, LATAM FDI, Ireland FDI

Global FDI is forecast to decrease further as countries enter into recessions caused by high cost of living, global food shortages, inflation, rising energy prices and massive national debt. The Bank of England expects a UK recession of 5 quarters long with a retraction of 2% on the economy starting later in 2022. Unctad says the global FDI decline is likely to continue until 2023. Global FDI flows in the second quarter of 2022 were down 31% on the first quarter. Investor uncertainty is very high now leading to a reduction in investing.