The burst of the information technology bubble and other trade deterrents halved the value of the world's direct investments in 2001 to $694.8 billion, the semigovernmental Japan External Trade Organization said Tuesday.

The investment amount for the 12-month period to Dec. 31, 2001, signifies a staggering 52.7 percent fall from the preceding year, JETRO said in its annual report on the world's trade and investment.

The margin of the year-on-year fall was the steepest since 1970, when JETRO began compiling relevant statistics.

Trade in both merchandise and services turned down in 2001, making the year the first since 1982 when the value of all merchandise commerce, services trade and direct investments simultaneously fell below year-before levels, JETRO said.

The trend of declining direct investments is likely to continue in 2002 as falling stock markets make it hard for companies to raise funds to finance their direct investments, the report says.

In addition, distrust of U.S. accounting practices induced by a slew of accounting scandals is likely to continue scaring off potential investors from buying companies or integrating, according to JETRO.

The JETRO white paper notes global trade and direct investments were boosted by the growth of the IT industrial sector between 1999 and 2000. As a result, worldwide direct investments in 2000 rocketed to $1.47 trillion.

The value of direct investments in Japan by foreign companies sank 24.7 percent in 2001 to $6.1 billion.

The value of global merchandise trade slid 4.3 percent to $6.08 trillion.

Services trade fell 1.3 percent to $1.44 trillion in 2001 because the Sept. 11 terrorist attacks put many people off traveling overseas.

But merchandise trade showed signs of halting its slide in the January-March quarter of this year as companies made progress in cutting back on inventories, the white paper says.

Growing trade in semiconductor chips and other electronics devices has had the positive effect of spurring trade in other product sectors.

Fallout from the collapse of the IT sector appears to have subsided in the merchandise trade sector, according to industry officials.