International mergers and acquisitions are forecast to decline by 56% in 2009 compared with 2008, the Organization for Economic Co-operation and Development said Tuesday.

The falloff in M&A, which represents the largest year-on-year decline since 1995, is primarily attributed to the 60% decline in the value of cross-border M&A by firms based in the OECD area, from over US$1 trillion in 2008 to US$454 billion in 2009.

However, the OECD notes that it was also due to the first sharp declines in M&A activity into and from major emerging economies: international M&A activity by firms based in Brazil, China, India, Indonesia, Russia, and South Africa fell by 62% to US$46 billion in 2009 from US$121 billion in 2008.

Speaking at the opening of the OECD Global Forum on Investment in Paris, OECD secretary-general, Angel Gurría, said that governments needed to do more to promote business investment. “Against the backdrop of a fragile global economy and sharp declines in international investment activity that have now spread to the emerging economies, the international investment policy community cannot afford to relax,” Gurría said.

“Investment protectionism poses a grave risk to recovery by further reducing international investment flows just at a time when these are most needed. Global challenges also require investment on a scale that far exceeds available public resources. Business investment is an essential part of the solution,” he added.

IE