Global FDIs up 14% in 2025 – UNCTAD

Orisemeke Benjamin

Global foreign direct investment (FDI) rose 14% in 2025 to $1.6 trillion, a preliminary report by the UN Trade and Development (UNCTAD), has stated.

The increase is coming after two years of decline.

The UN body noted that despite the increase, real investment activity remained fragile.

“More than $140 billion of the increase came from higher flows through global financial centres. Without these “conduit flows”, global FDI rose by only about 5%. This highlights the limited recovery in underlying investment activity,” the report stated.

The report further noted that key indicators of investor sentiment remained weak with the value of international mergers and acquisitions falling by 10%.

“International project finance fell 16% in value and 12% in deal numbers, marking the fourth straight year of decline and reaching levels last seen in 2019,” it said.

Also, the report said, the announcements of greenfield projects dropped by 16%, saying new, from-scratch foreign investment projects with total values high but largely driven by a small number of mega-projects.

“FDI flows to developed economies jumped 43% to $728 billion in 2025, driven by Europe and financial hubs. The European Union saw a 56% increase, supported by large cross-border acquisitions and a rebound in major economies including Germany, France and Italy.

“By contrast, flows to developing economies declined by 2% to $877 billion. Lower-income countries were hit hardest, with three quarters of least developed countries seeing stagnant or declining flows,” it said.

The report highlights a growing concentration of FDI in projects that are capital intensive and technology driven.

“Data centres attracted more than one fifth of global greenfield project values in 2025, with announced investment exceeding $270 billion largely driven by AI infrastructure and digital networks.

“France, the United States and the Republic of Korea led as host countries, while emerging markets such as Brazil, India, Thailand and Malaysia also attracted major projects.

“Similarly, the value of newly announced semiconductor projects rose by 35%

“While investment in technology-driven, capital-intensive projects lifts overall FDI figures, flows remain highly concentrated and generate limited spillovers. Policies should aim to link digital infrastructure investment more closely to skills development, innovation systems and local value creation%,” the report said.

In spite of the increase in global FDIs, infrastructure and renewable energy investment remain weak

“International infrastructure projects fell by 10%, largely due to a sharp pullback in renewable energy as investors reassessed revenue risks and regulatory uncertainty.

“Domestic investors increasingly filled the gap, with domestically led infrastructure projects rebounding strongly. But this shift risks widening investment gaps in countries that depend on international financing for large-scale infrastructure projects,” the report explained.

Looking ahead, UNCTAD said, downside risks are mounting as it is projected that FDI flows could increase modestly in 2026 if financing conditions continue to ease and cross-border mergers and acquisitions pick up.

“But real investment activity is likely to remain subdued, weighed down by geopolitical tensions, policy uncertainty and economic fragmentation. Without coordinated action, global investment risks becoming more concentrated in a few regions and sectors,” the report pointed out.