The great post-COVID bounce-back? It might surprise you which countries have recovered fastest, and where their investment is going

John McIIroy | 22 Mar 2023 | General

A bounce-back is defined as ‘to start to be successful again after a difficult period.’

Calling a global pandemic and economic shutdown a ‘difficult period’ is an understatement, but as the darkest days recede into memory it is time to look to the future.

For economic development, this means getting back to the fundamentals of identifying potential sources of international investment. But where should you look in the post-COVID world?

Our Bounce Back analysis, shown in the table below, compares the performance of the twenty largest sources of FDI in 2019. A country has ‘bounced back’ if it is responsible for more FDI projects in 2022 than it was in 2019.

A glance at the table should tell you all you need to know about global FDI. Only a handful of countries have bounced back, and the overall trend remains behind 2019 levels (10% to be precise). Recovery remains sluggish and is not helped by a world of high inflation, recession, and ongoing conflicts.

Looking at the data the most interesting stories are ones of both success and struggle:

  • India is the stand-out performer and has been responsible for 49% more projects in 2022 than it was in 2019.
  • Only seven of the twenty largest sources of FDI have more outward projects in 2022 than they did in 2019.
  • Some countries are significantly behind their pre-pandemic levels, including major economies such as Japan, China, and Germany.

Where should you look for investment?

The big winner in this analysis is India, the number of projects emerging from India was 49% higher in 2022 than in 2019. In terms of overall project numbers, India is still well behind the biggest players like the US, UK, and Germany, but its successful bounce back means it has risen from the 12th largest source of FDI in 2019 to the 6th largest in 2022.

The obvious answer behind India’s strong performance lies in a fast-growing economy with strengths in software and business services linked to the digital economy.

But before everyone re-focuses their attraction strategies on India, consider that around 70% of this growth is linked to India developing stronger ties with the Gulf region. Remove the Middle East from the analysis and India slips back to third place with a 16% Bounce Back, still good but now more in perspective.

As for those major sources of FDI, the UK has done best with a 10% increase on 2019 figures. The US is down 4%, while Germany has seen a significant decline and is a source of 24% fewer projects than in 2019.

When will the strugglers Bounce Back?

The other key takeaway from this analysis is to look at who is propping up the table. Investment projects from Japan are down 54% while China is down 49%. A positive spin on these figures suggests that when (rather than if) these key economies bounce back it will create a lot more projects to be won in the future. It is just a question of figuring out when this recovery is going to happen.

China’s position towards the bottom of the chart is in large part due to one of the longest Covid-related shutdowns of any country. So, we can expect an improvement in Bounce Back as the economy rebuilds, with forecasts for economic growth close to 5%. But China is emerging into a post-pandemic world much changed from 2019.

The trade wars between the US and China remain, but US policy is doubling down with legislation to protect sensitive industries and incentivise local investment. This may result in Chinese firms looking elsewhere for investment opportunities. But the strength of this opportunity outside the US will be decided by each national government’s policy towards China. At present that ranges from countries having significant concerns about Chinese investment to those with a more open-arms approach.

In Japan, disruptions to global supply chains and government incentives for re-shoring have reduced the interest in investing overseas. But a bounce back is expected in the medium term as economic fundamentals encourage companies back on the international stage. After decades of stagnation, the Japanese economy is in a better place than other developed countries: company balance sheets are filled with cash reserves, and Japan’s ageing population will force companies to look elsewhere to secure workforces.

Look behind the headlines to find your opportunities

While the global FDI picture is improving, there remain fewer projects and therefore greater competition for investment. Understanding where to look to find your next investor is an essential part of any investment attraction strategy.

OCO Global analysis can give you an advantage by going beyond the top-level figures to understand which markets are truly worth the effort. And perhaps more importantly, digging even deeper to match your sector strengths with relevant source markets and companies.


FDI project data from Financial Times (2023) FDiMarkets database
China growth forecast from Fitch ratings 08/02/2023