Global flows of foreign direct investment (FDI) remained in a trough last year at under half the record total of $1.4 trillion (€1.3 trillion) set in 2000, the United Nations trade and development agency UNCTAD said yesterday.

But in estimates based on preliminary figures for the flows, a key motor of world economic development, UNCTAD predicted that they would rebound this year, driven by higher corporate profits and increasing investor confidence.

The agency, which has tracked FDI trends closely for the past four decades, said the 2003 total was $653 billion, just $2 billion more than in 2002 when the global economy was struggling with recession, and well down on the $824 billion of 2001.

Among factors keeping the figure depressed was the continuing low number and value of cross-border mergers and acquisitions whose growing number since the 1980s had provided the main boost for investment flows around the world.

UNCTAD said this situation looked certain to improve during 2004 as the world economy recovered strength, company profits resumed an upward trend and industry consolidation around the globe picked up pace.

Figures issued by the agency showed that in 2003 the main developed industrial economies, headed by the United States, remained well ahead of developing countries as recipients of FDI - taking $467 billion, or two thirds, of the total.

European Union totals remained depressed at $341 billion against $374.4 in 2002 and $389.4 in 2001 respectively. - (Reuters)