Global FDI shrinks for second year in 2024, UN warns of worsening outlook for 2025
The World Investment Report 2025 by the UN Conference on Trade and Development (UNCTAD) noted that after stripping out financial flows routed through European conduit economies, global FDI actually rose 4% last year. But overall, the report offers a sober assessment of global investment trends, especially in developing Asia, which remains the world's largest recipient region.
FDI inflows into developing Asia fell 3% in 2024, reflecting growing uncertainty in cross-border capital flows.
China saw one of the steepest drops, with inflows plunging 29%, extending the sharp retreat from the previous year. India recorded a smaller 2% decline, though UNCTAD pointed out that an uptick in greenfield project announcements suggests that much of the new investment is yet to translate into actual flows.
Southeast Asia offered a rare bright spot: the Asean bloc attracted a record $225 billion in FDI, up 10% year-on-year.
Despite hopes of a rebound, UNCTAD warned that the investment outlook for 2025 has turned sharply negative, citing persistent geopolitical tensions and economic headwinds.
'The outlook for global investment in 2025 has turned negative,' the report said, citing downgrades across key indicators such as GDP growth, capital formation, exports, investor sentiment, and market stability.
'While tariffs have triggered a few supply chain realignment projects, their dominant impact has been to sharply elevate investor uncertainty,' it added, noting that deal and project activity hit record lows in early 2025.
UN Secretary-General António Guterres, in the report's preface, underscored the broader reversal of global integration. 'Rising trade tensions, policy uncertainty and geopolitical divisions risk making the investment environment even worse,' Guterres said.
The global economy continues to face a confluence of challenges—from ongoing wars in Ukraine and the Middle East to tighter financial conditions and policy uncertainty in the US.
"The global economy continues to grapple with a complex set of challenges: mounting debt, persistent underperformance in GDP growth, geopolitical tensions, and structural shifts in trade and investment flows," said Rebeca Grynspan, secretary-general of UNCTAD.
"What is most alarming, however, is the continued deterioration of investment flows into key sectors aligned with the Sustainable Development Goals," Grynspan added. "The world can least afford to fall short of these goals."
UNCTAD flagged sharp declines in investment into sectors aligned with the Sustainable Development Goals (SDGs). Infrastructure investments dropped 35%, renewable energy fell 31%, and spending on water, sanitation and hygiene contracted 30%. Agrifood investments declined 19%. Only health and education bucked the trend, posting a 25% increase.
Semiconductors and the digital economy saw the strongest investment surges—rising 140% and 107% respectively—while global value chain–intensive industries grew a modest 1%. The number of greenfield investment projects worldwide rose 3%, while cross-border mergers and acquisitions jumped 14%.
In developed economies, financial transactions and corporate restructuring shaped FDI trends in 2024, reflecting supply chain shifts and international tax reforms.
FDI flows to Europe declined 11% to $198 billion, and by more than half when adjusted for conduit flows that distort headline numbers. All major European economies saw sharp declines.
North America stood out, with FDI rising 23%, supported by strong mergers and acquisitions activity.
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