According to a UN report, heightened investor uncertainty brought on by persistent trade tensions is the main reason why global foreign direct investment is expected to decline once again in 2025.
According to the UN Conference on Trade and Development’s most recent report, foreign direct investment (FDI) fell 11% to $1.5 trillion in 2024, the second consecutive year of decrease. Even while FDI flows increased by 4%, this number was exaggerated by erratic flows via countries that serve as financial middlemen, or conduit economies.
Most indicators, including as FDI prospects, capital formation, exports of goods and services, financial market volatility, and investor confidence, have been revised negative as a result of ongoing trade tensions.
UNCTAD’s perspective is in line with a recent World Bank analysis that found that expanding trade obstacles, geopolitical tensions, and economic fragmentation hindered cross-border investment, causing FDI flows into developing economies to fall to $435 billion in 2023—the lowest level since 2005. According to the World Bank, in 2023, foreign direct investment (FDI) into advanced economies fell to $336 billion, the lowest amount since 1996.
Antonio Guterres, the UN secretary-general, commented on the most recent report: “We are witnessing the reverse at a moment when the world should be strengthening collaboration and increasing opportunity.
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