Global FDI set to drop again this year after 11% fall in 2024: UNCTAD.

Global foreign direct investment is set to fall again in 2025 primarily due to high investor uncertainty driven by ongoing trade tensions, according to a UN analysis.

In its latest report, the UN Conference on Trade and Development revealed that FDI dropped 11 percent to $1.5 trillion in 2024, marking a second year of decline.

While FDI flows were up 4 percent, this figure was inflated by volatile flows through conduit economies — nations that act as intermediaries for finances.

Ongoing trade tensions have lead to downward revisions of most indicators, including FDI prospects, capital formation, and exports of goods and services, as well as financial market volatility, and investor sentiment.

The views of UNCTAD align with a recent report released by the World Bank, which said that FDI flows into developing economies dropped to $435 billion in 2023, the lowest level since 2005, as rising trade barriers, geopolitical tensions, and growing fragmentation curbed cross-border investment.

The World Bank added that FDI into advanced economies also dropped, sinking to $336 billion in 2023, the weakest level since 1996.

The UNCTAD analysis revealed that inward FDI inflows in Saudi Arabia totaled $15.73 billion in 2024, representing a 31 percent decline from the previous year.

The Kingdom’s outflows in 2024 were $22.04 billion, marking a year-on-year rise of 27.1 percent.

Geographically, FDI value in Europe stood at $182 billion last year, representing a decline of 58 percent compared to 2023.

North America attracted FDI worth $343 billion, a 23 percent increase year on year.

Africa’s FDI flows rose by 75 percent year on year, reaching $97 billion in 2024, while FDI flows in developing Asia stood at $605 billion, marking a 3 percent decline.

Source: Arabnews