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Global foreign direct investment (FDI) flows are continuing on a subdued trajectory, reflecting persistent macroeconomic headwinds and investor caution. This is the headline finding of UN Trade & Development (known as UNCTAD)’s recap of official FDI data for the previous year.
Global FDI flows remained effectively stagnant in 2024, edging up just 4% to $1.5 trillion, according to the World Investment Report 2025, release June 19th. However, this modest rise was largely driven by volatile financial flows through conduit economies in Europe. Stripping out these one-off transactions, underlying FDI fell by 11% — marking a second straight year of double-digit decline as mounting policy risks, regulatory scrutiny and global economic uncertainty continue to weigh on investor confidence.
The past few years for FDI flows have been volatile, as a hoped-for recovery after the Covid-19 pandemic was thwarted by a confluence of crises and pressures ranging from economic to geopolitical.
In a foreword, António Guterres Secretary-General of the United Nations, warned the report delivered a “sobering message” about the state of international investment and its implications for vulnerable economies.
“At a time when the world should be deepening cooperation and expanding opportunity, we are seeing the opposite. Barriers are rising,” he writes. “Rising trade tensions, policy uncertainty and geopolitical divisions risk making the investment environment even worse.”
The value of international project finance, crucial for infrastructure investment, continued its recent downfall, dropping by 26% following an already sharp decline the previous year. Cross-border mergers and acquisitions increased by 14% in value to $443 billion but this figure remains below the long-term average.
Meanwhile, greenfield project announcements in manufacturing remained stable, in line with an uptick in cross-border activity among supply chain–intensive industries such as electronics, automotive, machinery and textiles.
Over the past two years, multinational enterprises (MNEs) have been anticipating the need for strategic rebalancing of production locations, with South-East Asia, Eastern Europe and Central America the main beneficiaries, according to the report. Several countries in these regions registered an increase in investment announcements in 2024, despite the overall downward pressure on FDI.
Following earlier supply shortages and current policy-driven efforts to shift production locations, the semiconductor industry has once again emerged as a key driver of investment with several major project announcements. Among the 10 largest new projects globally, four were in semiconductors — three based in the United States and one in India — representing a combined investment of $70 billion.
Also highlighted in the report is an evolution in the make-up of the top 100 multinational enterprises (MNEs), as ranked by UNCTAD according by foreign assets, sales and workforce. reflecting shifts from traditional industries to service-oriented and technology-driven ones. Over the past decade, leading technology companies such as Alphabet, Amazon, Microsoft, Huawei, Tencent and Samsung have increased their share of the sales and assets of the world’s largest MNEs. Technology companies now generate over 20% of the total revenue among the top 100 MNE.
The report highlights digital economy investment as a key driver of growth and structural change. Growing at an annual rate of 10% to 12%, well above the pace of global GDP, the digital economy is contributing an increasingly significant share to global value creation.
In general, however, the outlook for international investment in 2025 looks increasingly negative. “While modest growth seemed possible at the start of the year, trade tensions have led to downward revisions of most indicators of FDI prospects,” the report states.
“While tariffs have led to some investment project announcements aimed at restructuring supply chains in manufacturing sectors, their main effect has been a dramatic increase in investor uncertainty.”
Early data for the first quarter of 2025 points to record-low activity in deals and projects, according to UNCTAD.
According to Nan Li Collins, senior director in the Division on Investment and Enterprise at UNCTAD, key factors that are impacting FDI flows include macroeconomic trends, technological innovation, sectoral shifts, and geopolitical and trade risks.
“The trajectory of global FDI in 2025 will be shaped by a complex interplay of economic, geopolitical and policy dynamics,” Li Collins says.
This article was published by Courtney Fingar on 2025-07-07 15:28:00
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