Global foreign direct investment (FDI) fell by 11 percent in 2024, marking the second consecutive year of decline and confirming a deepening slowdown in productive capital flows, according to UNCTAD’s latest World Investment Report 2025.
Although global FDI rose by 4 percent in 2024 to $1.5 trillion, the increase is the result of several factors, including volatile financial conduit flows through several European economies, which often serve as transfer points for investments.
The report revealed that investment dropped sharply across developed economies, particularly in Europe. In developing countries, inflows appeared broadly stable. However, this conceals a deeper crisis: in too many economies, capital is stagnating or bypassing entirely the sectors that matter most, including infrastructure, energy, technology and the industries that drive job creation.
FDI falls 58 percent in Europe
The investment landscape in 2024 was shaped by geopolitical tensions, trade fragmentation and intensifying industrial policy competition. These dynamics, combined with elevated financial risk and uncertainty, are redrawing global investment maps and eroding long-term investor confidence.
In 2024, multinational companies increasingly prioritized short-term risk management over long-term strategies, particularly in sectors sensitive to national security, supply chain reconfiguration and shifting trade policies.
“Too many economies are being left behind not for lack of potential, but because the system still sends capital where it’s easiest, not where it’s needed. But we can change that. If we align public and private investment with development goals and build trust into the system, domestic and international markets will bring scale, stability and predictability, and today’s volatility can become tomorrow’s opportunity,” said UN Trade and Development Secretary-General Rebeca Grynspan.
The decline in global FDI was driven largely by a 22 percent drop in FDI to developed economies, including a 58 percent plunge in Europe. However, North America bucked the trend with a 23 percent increase, led by the United States.
Africa sees 75 percent in FDI
In developing economies, regional trends diverged. Africa saw FDI rise 75 percent, driven by a single large project in Egypt. Excluding that, inflows still rose 12 percent, supported by investment facilitation and regulatory reform.
The report also revealed that Asia remained the top recipient, despite a modest 3 percent decline. Countries in Southeast Asia posted a 10 percent rise in FDI, reaching $225 billion, the second-highest level on record. Meanwhile, Latin America and the Caribbean experienced a 12 percent decline in total flows, though greenfield project announcements rose in key markets such as Argentina, Brazil and Mexico.
In the Middle East, FDI maintained strong inflows, bolstered by economic diversification in the Gulf region.
Among structurally vulnerable economies, FDI flows were mixed: inflows rose in least developed countries by 9 percent and small island developing States by 14 percent, but fell 10 percent in landlocked developing countries. In all three groups, investment remained highly concentrated in just a few countries.
Closing SDG financing gap needs $4 trillion annually
While greenfield investment values held steady, international project finance, often key for infrastructure, fell by 26 percent in 2024. The drop was especially steep in sectors critical to achieving the Sustainable Development Goals: renewable energy (-31 percent), transport (-32 percent), and water and sanitation (-30 percent).
However, global FDI in the digital economy grew 14 percent, led by Information and Communication Technology (ICT), manufacturing, digital services and semiconductors, but this growth remained heavily concentrated. Ten countries accounted for 80 percent of all new digital projects, leaving many developing economies excluded from the digital boom due to persistent infrastructure, regulatory and skills gaps.
The report warned that current levels of investment fall far short of global needs. Closing the Sustainable Development Goals (SDG) financing gap alone would require an estimated $4 trillion per year in developing countries – a target that is becoming more distant.
