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With FDI going down, US economy may face double dip recession
Agencies - Washington

With mounting corporate scandals and accounting frauds leading to low foreign direct investment (FDI), analysts fear US economy may be in for a double dip recession, media reports and analysts said.

With fresh acquisitions by foreign companies almost nil, FDI in the US plummeted last year to USD 124 billion and started out this year at an even slower pace, according to the US commerce department. That is down from a peak of USD 301 billion in 2000. With savings traditionally low, the US economy depends heavily on FDI.

Foreign investors, who once joined confident Americans in a wave of spectacular acquisitions and business spending that helped power the 1990s US economic boom, are now turning cautious about the American economy, the New York Times reported.

Investors are fleeing from stocks to bonds, reported the Financial Times. The situation is compounding the current weakness and making it harder to achieve a robust recovery from last year’s recession, the Times said. Analysts worry that this could lead to a “double dip recession.” “Foreigners were on the verge of investing (in the US) again, until their confidence was upended by the corporate scandals and the slide of the stock market. And now they cannot get financing and their own economies back home are weakening,” said Mr Mark M Zandi, the chief economist at economy.com, a research firm.