Foreign direct investment (FDI) is at a pivotal juncture, as indicated by the latest Global Investment Trends Monitor recently published by UN Trade and Development (UNCTAD).
In 2024, global FDI experienced an 11 percent increase, reaching an estimated $1.4 trillion. However, when excluding flows through European conduit economies—often utilized as transfer points for investments prior to their final destination—there was an 8 percent decline.
The UNCTAD report forecasts that FDI will see moderate growth in 2025, primarily driven by enhanced financing conditions and a rise in mergers and acquisitions (M&A). Nevertheless, risks and uncertainties for investors remain considerably high.
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The report emphasized that multinational transactions in conduit economies resulted in a remarkable 43 percent increase in developed economies. In contrast, without these conduit flows, investments fell by 15 percent.
FDI directed towards developing nations saw a 2 percent decline, presenting challenges to the advancement of the Sustainable Development Goals (SDGs).
Globally, investments in sectors related to the SDGs decreased by 11 percent in 2024, with a reduction in projects concerning agrifood systems, infrastructure, and water and sanitation when compared to 2015, the year the goals were established.
The number of greenfield projects fell by 8 percent, and their value dropped by 7 percent. However, investments in semiconductors and artificial intelligence managed to keep values close to the record levels of 2023.
Additionally, international project finance, which remains concentrated in infrastructure, continued its steep decline. The number of deals diminished by 26 percent, with their overall values decreasing by nearly a third.
The report also noted that cross-border M&A transactions fell by 13 percent, yet total values increased by 2 percent, indicating a potential recovery from a downward trend that has persisted for two years.
