The United Nations warned on Monday that the slump in foreign investment in developing countries like those in the Caribbean last year was likely to continue for the next two years.

Secretary-General of the UN Conference on Trade and Development (UNCTAD) Supachai Panitchpakdi said foreign direct investment (FDI) may continue its downward trend this year.He said that the global meltdown in economic and financial markets had resulted in a 15 per cent decline in investments last year.

"Very little has been said about the impact of the crisis on investment," said Supachai at the start of a week-long conference on FDI trends in the developing world.

"You cannot have recovery without going into new investment, new employment," he said, underscoring the need to 'clean up' the financial sector around the world to support new rounds of investment.

He also warned participants of the first meeting of UNCTAD's Investment, Enterprise and Development Commission that the decline in FDI will be far deeper this year.

According to UNCTAD's World Investment Prospects Survey 2009-2011, about 80 per cent of executives of trans-national corporations surveyed anticipated cutbacks in FDI in the short-term but a return to more healthy flows in 2011.

"There are indications that a deep decline will take place with a great degree of variation between countries and regions," Supachai said.

He said among the signals are the declining profits reported by businesses and limits on resources as banks struggled to cope with heavy losses and continued to rid themselves of toxic assets.

"No new borrowing, no new flows of funding mean little new investment internationally," the UNCTAD's chief said.

Supachai also warned that 'green shoots', signalling economic recovery in the stock markets of developed countries, may lead to the 'dangerous impression' that that crisis is over.

He said developing countries "must not be forgotten", adding: "They might not go through the same door. It might turn into a debt crisis for developing countries."