Chapter 1 Macroeconomic and Inward Foreign Direct Investment Trends in the World and Japan

Despite the increase in global inward FDI in 2019, up to 40% decline expected in 2020

  • According to United Nations Conference on Trade and Development (UNCTAD), the inward FDI in 2019 increased by 3.0% from the previous year to $1.5 trillion. Global FDI increased for the first time in four years.

Trends in Global Inward FD

  1. Note:

    1) The year-over-year change in 2020 is estimated to be negative 30-40%. The graph shows an assumption where FDI declines by 40% in 2020.

    2) "Developed economies" is as defined by UNCTAD. The amount of inflow to developing economies is computed by subtracting that of developed economies from that of the world.

  2. Source:

    "World Investment Report 2020"(UNCTAD)

  • Due to the impacts of COVID-19, global inward FDI is forecasted to decline 30 to 40 % year-over-year in 2020. Inward FDI in the first half of 2020 decreased by 49%, compared to the same period of 2019.

FDI Growth (forecast)

  1. Note:

    Classification of each region is as defined by UNCTAD.

  2. Source:

    "World Investment Report 2020" (UNCTAD)

FDI flow to Japan in 2019 was the second largest. Although the flow has been steady, close monitoring required in 2020.

  • In 2019, inward FDI to Japan increased 37.3% from the previous year to 4.0 trillion yen, the second largest since 2014, for which comparable data is available.
  • Investment from the US was 1.9 trillion yen, up 141.5% from the previous year, continuing to be the largest investor by country. Investment from major Asian countries and regions remarkably increased as well.

FDI Flow to Japan

  1. Note:

    The figures before 2013 are calculated based upon a different principle.

  2. Source:

    "Balance of Payments" (Ministry of Finance, Bank of Japan)

  • Although the FDI flow from January to September 2020 has increased from the same period of the previous year, close monitoring for the flow after 2020 is required, given the recent trends in statistics, such as greenfield investment.

FDI Flow to Japan: Top 10 Countries and Regions(100 million Yen, %)

FDI Flow to Japan: Top 10 Countries and Regions
2019
Ranking
Change
in
Investor
Country/
2020
Jan-Sep
2019 Share YoY
1 US 19,140 48.3 141.5 22,204
2 UK 3,122 7.9 -35.6 31,577
3 Hong Kong 2,519 6.4 192.9 1,327
4 Singapore 2,141 5.4 - 3,410
5 China 2,090 5.3 135.9 170
6 Cayman 1,445 3.6 -65.1 -1,214
7 Luxemburg 1,387 3.5 - -318
8 France 1,370 3.5 -48.0 1,357
9 Thailand 1,135 2.9 -13.9 1,216
10 Taiwan 1,114 2.8 170.4 763
- - World 39,637 100.0 37.3 65,210

FDI Flow to Japan: Top 10 Industries(100 million Yen, %)

FDI Flow to Japan: Top 10 Industries
2019
Ranking
Change in
Ranking
Sector 2020
Q1-Q2(P)
2019 YoY
1 Finance&insurance 8,875 41.8 3,955
2 Electric machinery 3,877 -29.3 1,968
3 Transportation Equipment 3,813 76.6 2,114
4 Chemicals&pharmaceuticals 3,359 28.5 90
5 Services 1,289 3827.9 976
6 Food 610 556.8 4
7 Real estate 349 -57.3 619
8 Construction 267 - -14
9 Transportation 170 38.3 -37
10 Iron, non-ferrous&metals 109 52.5 -4

FDI stock in Japan increased to 33.9 trillion yen at the end of 2019

  • The FDI stock in Japan at the end of 2019 reached a new high of 33.9 trillion yen, up 10.4% from the previous year. The ratio of the balance to GDP increased from 5.6% in the previous year to 6.1%. The stock at the end of the second quarter of 2020 was estimated to be 39.2 trillion yen.

FDI Stock in Japan

  1. Source:

    "International Investment Position of Japan" (Ministry of Finance, Bank of Japan), "National Accounts of Japan" (Cabinet Office)

  • By country and region, the FDI stock of the US in 2019 was 8.0 trillion yen or 23.6% of the total, more than twice larger than France (4.0 trillion yen), which was the second largest.

FDI Stock in Japan by Country and Region(100 million Yen, %)

FDI Stock in Japan by Country and Region
Rank Country/Region Stock Share
1 US 79,801 23.6
2 France 39,284 11.6
3 Netherlands 39,067 11.5
4 Singapore 35,618 10.5
5 UK 24,960 7.4
6 Cayman Isl. 19,485 5.8
7 Switzerland 14,725 4.3
8 Hong Kong 12,365 3.7
9 Luxembourg 9,727 2.9
10 Germany 9,576 2.8
- Others 54,103 16.0
- Total 338,711 100.0
  • By industry, non-manufacturing industry accounted for 59.2%. Looking at detailed industries, the stock of finance and insurance was 9.5 trillion yen, accounting for 39.4%.

FDI Stock in Japan: Top 10 Industries(100 million Yen, %)

FDI Stock in Japan: Top 10 Industries
Rank Industry Stock Share
1 Finance&insurance 94,995 39.4
2 Transportation equipment 35,990 14.9
3 Electric machinery 26,638 11.1
4 Chemicals&pharmaceuticals 20,161 8.4
5 Communications 15,550 6.5
6 Services 12,712 5.3
7 General machinery 5,247 2.2
8 Real estate 5,121 2.1
9 Transportation 4,079 1.7
10 Glass&chemicals 3,371 1.4
- Others 17,056 7.1
- Total 240,920 100.0

Contact Us

Investing in Japan

JETRO Worldwide

Was this information useful?

Send