8216;Crisis scares M038;A away,world FDI slumps8217;

Global FDI grew 5 per cent last year to 1.24 trillion,and the UN agency had expected it to hit 1.4-1.6 trillion this year. The 2011 total is now expected to come in at the bottom of that range.

In the first half of 2011 FDI flows were 32.0 percent higher than a year previously,but that pace did not continue into the third quarter,when FDI shrank by about a third compared to the same quarter of 2010,according to Reuters calculations based on the UNCTAD data.

Despite the slowdown in Mamp;A,the value of deals in the third quarter was still the second-highest since the start of 2009,but the momentum is now slowing,and downside risks have intensified,the report said.

A sharp slowdown in announced cross-border Mamp;As during the first half of 2011 further suggests that equity investments may continue to decline during the rest of the year,it said.

Previous quarters have often seen falling Mamp;A offset or tempered by strong greenfield investment,the other main constituent of FDI.

But greenfield investment also saw a big fall in the third quarter of 2011. Although the figure may be revised upwards,the preliminary estimate shows it to be the lowest since the second quarter of 2005.

Unlike cross-border mergers and acquisitions,where one company expands by buying a rival overseas,greenfield investment involves setting up a completely new operation abroad,perhaps as a way to open up new markets or to gain access to relatively cheap production.

Developing countries host about two-thirds of the total value of greenfield investment projects,but the level of new investment in those countries roughly halved between the first and third quarters.

The overall figures for FDI in the first half of 2011 mask a big contrast between the BRICS economies,which held steady or even increased the value of inbound FDI,and some of the richest developed countries.

India8217;s inflows jumped from 12.3 billion in the first half of 2010 to 17.8 billion in the first six months of 2011,while South Africa8217;s more than quadrupled to 2.5 billion. China8217;s grew by almost 10 billion to 61 billion and Russia enjoyed a 4 billion increase to 23.4 billion.

Brazil,which saw inbound FDI triple to 36 billion between the first and second halves of 2010,held on to most of its gains in the first half of 2011 with flows of 33 billion.

Meanwhile,FDI flows into Germany largely dried up,falling to 7 billion from 22 billion a year earlier,and US inbound FDI slipped 11 percent to 74.3 billion,having ballooned to 145.1 billion in the second half of 2010.