Foreign direct investment (FDI) inflows to South Africa recovered in the first half of 2013 to $3.3-billion from the $2.1-billion recorded in the corresponding period of 2012, a new United Nations Conference on Trade and Development (Unctad) report shows.

The increase is reflected in Unctad’s latest ‘Global Investment Trends Monitor’, which also shows that FDI flows to Africa as a whole decreased by 5% over the same period, despite developing and transition economies accounting for a record share of more than 60% of global FDI flows.

The report does not offer an explanation for South Africa’s recovery, saying only that inflows to the country “resumed their growth”.

International Investment Initiative director Stephen Gelb, who is a keen South Africa FDI observer currently based at the University of Bern, in Switzerland, says the figures are derived from the South African Reserve Bank’s Quarterly Bulletins.

The bulletins show that the capital inflows in the first quarter originated mainly from long-term loan financing extended by foreign parent companies to their domestic subsidiaries, while in the second quarter a sizeable foreign intra-company loan by an investor in the petrochemical industry was extended.

News of the increase comes amid persistently slow economic growth and concerns over South Africa’s stability as an investment destination, owing in particular to recent labour-market volatility.

In addition, some anxiety has been expressed about the country’s decision to terminate bilateral investment treaties with a number of European countries in favour of new domestic legislation.

The Unctad report was published as the International Monetary Fund (IMF) indicated that Africa’s largest economy is set to lag growth rates in the sub-Saharan Africa region as a whole. The IMF says that, while South Africa will growth by only 2% in 2013, the region should expand at an average rate of 5%. It also indicates that the region’s growth in 2013 would have been closer to 6% this year, if South Africa were to be excluded from the calculation.

But Gelb argues that more important than the actual first-half FDI number is the fact that the longer-term trend on inflows seems to have returned to levels last seen between 2000 and 2005 in dollar terms. “This would be a lower share of gross domestic product than in the earlier period, but not nearly as bad as the doomsayers imply.”

In 2012, FDI inflows to South Africa fell 24% to $4.6-billion, having recovered to $5.8-billion 2011, from $1.2-billion in 2010. But even the 2012 performance was above the pre-economic-crisis average of $3.9-billion a year.

Unctad estimates global FDI flows rose 4% to $745-billion during the first half of 2013 compared with the same period in 2012, but expects that flows will remain close to the 2012 level for the year as a whole.

FDI flows to developed countries declined, but this was more than offset by a rise in flows to developing and transition economies, driven by acquisitions in Central America and the Caribbean as well as record inflows into Russia.