21 Feb 2022

Analysis of Developments in EU Capital Flows in the Global Context (2021)

Rise and fall after the COVID-19 outbreak

Cinzia Alcidi / Doina Postica / Farzaneh Shamsfakhr / Willem Pieter De Groen / Damir Gojsic

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After 2020’s unprecedented fall in GDP, most countries have managed to recover quite rapidly in 2021thanks to similarly unprecedented policy responses. After the abrupt falls of early 2020, pre-existing global capital flows trends have resumed and even strengthened. FDI accelerated their fall, especially in the EU, while portfolio investment increased quite strongly. Other forms of investment, and in particular banking holdings, seem to have weathered the pandemic well. This is in stark contrast with the global financial crisis of 2007-09. Uncertainty, however, remains elevated. The economy remains fragile, public debt has increased enormously and new risks, from inflation to geopolitical instability, are intensifying. This study provides evidence of these trends and undertook an in-depth investigation into several selected issues relevant to EU capital flows. 

A set of data visualizations on this topic can be viewed here.