According to the U.N. Trade and Development organization, global foreign direct investment (FDI) dropped 11 percent in 2024. Much of the decline can be explained by trade tensions and rising uncertainty. However, considering that FDI fell by double digits in 2023 as well, it seems likely that there is more to the story – specifically, rising worldwide debt and a structural shift in trade and investment flows. With investor uncertainty still high, the outlook for 2025 is pessimistic as well.
Closer inspection reveals some bright spots, however. For instance, although FDI flows to developed economies fell by 22 percent in 2024, investment in developing countries was stable. As a result, developing economies’ share of FDI inflows rose to 58 percent from 51 percent a year earlier. Ten countries (including China, Brazil, Mexico, Indonesia and India) accounted for roughly three-fourths of these inflows. Similarly, investment in the digital economy increased by double digits, outpacing global GDP growth.
