WASHINGTON, June 6: Foreign investment in the United States suffered a precipitous 60-per cent drop in 2001, as the US market lost some of its lustre due to an economic recession and terrorist attacks, according to the latest government figures.

Foreigners plunked down $132.9 billion last year to acquire or establish businesses in the United States, down from a record $335.6 billion invested here in 2000, said the Commerce Department’s Bureau of Economic Analysis.

“The decrease reflected weakness in the US and world economies and a sharp drop in overall merger and acquisition activity worldwide,” the bureau said in a report made public on Wednesday.

The figure marks the steepest drop in foreign investment in a decade and, according to some analysts, could make financing the fledgling US economic recovery more difficult because US domestic savings are traditionally low.

Foreign-owned assets in the United States currently total $9.4 trillion while US claims on the rest of the world amount to $7.2 trillion, according the White House Council of Economic Advisers.

But US officials noted that despite the decrease, the current level of foreign investment in the United States was still higher than in any year prior to 1998.

Surprisingly, the most dramatic vote of no-confidence came from Britain, one of the closest US allies, whose capital outlays plunged from $110.2 billion in 2000 to $16.6 billion one year later.

Other Europeans shunned the US market almost as much.

If French entrepreneurs plowed into the US economy $23.7 billion in 1999 and another $26.1 billion in 2000, their investments plummeted last year to just under five billion dollars.

Germany, the European economic powerhouse, followed the general trend, although at a slower pace. Its direct investments into the US economy were down to $12.8 billion in 2001 from the $18.4 billion registered the year before.

Meanwhile, the Japanese were clearly suffering from a severe case of cold feet. In just one year, their outlays dropped from $26 billion to under $3.8 billion.

Australia was the only major country to actually increase its US investments from 2000, pouring into the US economy five billion dollars, according to the report.

Very few US industries retained their attractiveness to foreign investors as US recession-hit equity markets took a nosedive and public confidence inside and outside the United States was shaken by the September 11 terrorist attacks.

The bureau said foreign investments fell particularly low in telecommunications and other high-tech industries following the bursting of the dot-com bubble.

In manufacturing, they went down from $143.2 billion to $35.5 billion, while information services attracted only $25.9 billion compared to $67.9 billion in 2000.—AFP