Foreign direct investment (FDI) flows saw a 2% decrease to $1.3 trillion in 2024, due to trade tensions and geopolitical uncertainties in a slowing global economy. The report notes that excluding a few European conduit economies with significant swings in investment flows, the decrease surpasses -10%. FDI flows to developing countries fell by 7% to $867 billion, with a 26% decline in international project finance deals, which are crucial for infrastructure investments and the most vulnerable countries.
Crises, protectionist policies, and regional realignments are disrupting the global economy, leading to the fragmentation of trade networks, regulatory environments, and global supply chains. This disruption undermines the stability and predictability of global investment flows, creating both challenges and isolated opportunities. Despite the challenging outlook for 2025, there is the possibility of modest growth due to easing financial conditions and efforts to facilitate investment at both national and international levels.
Investments are increasing in global value chain-intensive manufacturing sectors like automotive and electronics, particularly in regions and countries with easy access to major markets. However, many developing countries continue to struggle to attract foreign investment and participate in global production networks, leaving them marginalized in the global economy.
