Global cut-backs in consumer and business spending, as well as disruptions in financial systems, have significantly affected worldwide trade and investment flows. In its most recent World Economic Outlook Update published on 28 January 2009, the International Monetary Fund (IMF) projected that the volume of world trade in goods and services would contract by 2.8 per cent in 2009, a sharp fall compared to the increases of 7.2 per cent and 4.1 per cent in 2007 and 2008 respectively. In a similar manner, global investments flows are also likely to be negatively affected by falling corporate profits and tighter credit conditions. The United Nations Conference on Trade and Development (UNCTAD) has estimated that global Foreign Direct Investment (FDI) inflows declined by 21 per cent in 2008, and are likely to continue falling through 20091 (Exhibit 1). These developments will have an impact on Singapore’s near-term trade and investment outlook.

Click here for the full article.