Foreign domestic investment (FDI) outflows continued to recover in 2011 and prospects for FDI outflows in 2012 continue to improve. But multinationals remained guarded, owing to the fragility of the current phase of the global economic recovery, a new United Nations report shows.

The latest ‘Global Investment Trends Monitor’ also notes that the 16% increase in outflows last year (to an estimated $1.66-trillion) did not translate into an equivalent expansion of productive capacity, with most of the activity directed towards cross‐border acquisitions rather than investments in new productive assets.

Africa also contributed to what the United Nations Conference on Trade and Development (Unctad) described as loss of momentum in outward FDI from developing countries, which declined 7% year-on-year. A fall in outward FDI from Latin American and the Caribbean and a slowdown in the growth of investments from developing Asia were the main contributors, however.

Outflows from African countries fell to an estimated $2.1-billion last year, compared with $5-billion in 2010. Declines in outflows from Egypt and Libya weighed on the continent’s performance, along with divestments by South African companies. Unctad referred specifically to Pick n Pay Stores’ withdrawal from Franklin, in Australia.

The latest ‘Global Investment Trends Monitor’ did not reflect on inflows, which were covered in an earlier edition published in January. These were estimated to have risen 17% year-on-year to $1.5-trillion, with developing and transition economies accounting for half of that amount, with record inflows of $755-billion.

Outward FDI from developed countries rose by 25% to above $1.23-trillion last year, with the European Union, North America, and Japan all contributing to the growth, the report states.

Cross‐border mergers and acquisitions rose 70% to reach $585-billion, but greenfield investment projects by multinationals declined marginally.

“This decline reflects a retreat from projects in various countries and regions,” Unctad says, but it also notes that multinationals from Indonesia, Mexico, Saudi Arabia and South Africa more than doubled the value of their greenfield projects during the year.