GENEVA: Global investors are expected to scale back their activities almost 30 percent overall in 2009, but a recovery should begin "slowly" in 2010, the UN's trade development mission said on Thursday.

"Global FDI (foreign direct investment) prospects are set to remain gloomy in 2009, with inflows expected to fall below 1.2 trillion dollars" (0.8 million euros), the UN Conference on Trade and Development (UNCTAD) said in a report.

"However, recovery of these flows is expected to begin slowly in 2010 to reach up to 1.4 trillion dollars, and will gain momentum in 2011 when the level could approach an estimated 1.8 trillion -- almost the same as in 2008."

Foreign direct investment reached a record in 2007, before falling back in 2008 to 1.7 trillion dollars in the financial crisis.

While the fall in investment in developed countries was compensated for by growth in Africa, Asia, Latin America and the Caribbean, southeast Europe and ex-Soviet states in 2008, all regions are expected to post declines this year.

In Africa, FDI rose to a record 88 billion dollars in 2008. But it will in 2009 post its first year of decline after five consecutive years of growth.

Even in Asia, where FDI rose by 17 percent to a record 298 billion dollars in 2008, investment flows are expected to decline.

Likewise in Latin America, FDI grew 13 percent to 144 billion dollars in 2008, but is set to slide this year.

Upon the pickup, however, it is the emerging giants as well as the United States which are expected to drive the growth.

"The United States, along with China, India, Brazil and the Russian Federation are likely to lead the future FDI recovery," said UNCTAD.

Meanwhile, industries that are less sensitive to business cycles and which operate in markets with steady demand, such as agriculture, are likely to be the "engine for the next FDI boom."

UNCTAD also forecast a wave of mergers and acquisitions in the years ahead as governments offload their stakes in ailing industries when the global economy recovers.