The latest Global Investment Trends Monitor report published by the United Nations Trade and Development Organization (UNCTAD) shows that FDI is at a crossroads. The report estimates that foreign direct investment (FDI) will fall by 8% in 2024, posing a challenge to progress on the Sustainable Development Goals, which rely on international project finance.

    Global foreign direct investment (FDI) grew by 11 per cent in 2024 to an estimated £1.4 trillion, but fell by 8 per cent if flows through European transit economies are excluded, the report noted. European transit economies often act as intermediaries for investments before they reach their final destination, a change that reflects the world's grappling with changing economic dynamics and ongoing uncertainty.

Advanced economies: two very different situations

    According to the report, advanced economies have experienced stark contrasts. Foreign direct investment in North America increased by 13 percent, driven by an 80 percent increase in U.S. mergers and acquisitions. The value of investment in greenfield projects built from scratch in the U.S. surged by 93% to $266 billion, largely driven by mega-semiconductor projects. Greenfield investment in the UK also grew by 32% to US$85 billion, while Italy saw a significant 71% increase to US$43 billion.

However, Europe is facing a sharp decline. Excluding transit economies, FDI fell by 45 per cent, with 18 of the 27 EU countries declining. Foreign direct investment (FDI) fell by 60 per cent in Germany and 35 per cent in Italy.

Developing economies: Mixed

    Among developing economies, foreign direct investment (FDI) fell by 2 percent, the second consecutive year of decline, the report said. This decline threatens progress on the Sustainable Development Goals (SDGs), which rely heavily on international financing. Investment related to this fell by 11% in 2024 compared to 2015, when the SDGs were adopted, with fewer projects in agri-food, infrastructure, and water and sanitation than in 2015.

    Asia, the largest recipient of FDI in developing regions, saw its investment inflows fall by 7 per cent. China's foreign direct investment (FDI) has fallen by 29% and is now 40% below its peak in 2022. In contrast, India's was up 13%, largely driven by the announced growth of greenfield projects. At the same time, foreign direct investment (FDI) in ASEAN countries grew more modestly, by 2 percent to a record $235 billion.

    In Latin America and the Caribbean, foreign direct investment fell by 9 per cent and investment inflows to Brazil by 5 per cent. However, Brazil, Argentina and Colombia have all seen an increase in the number and value of greenfield projects, showing the potential for future recovery. Despite weakness in regional projects, Mexico's FDI grew by 11 per cent, demonstrating resilience in the face of broader challenges. 

     Africa outstands, with foreign direct investment surging by 84 per cent to $94 billion, largely driven by a mega project in Egypt.

Looking ahead: cautious optimism

    Looking ahead to 2025, FDI is expected to grow modestly, benefiting from improved financing conditions and a resurgence in M&A activity, the report said. However, risks and uncertainties, such as geopolitical tensions and global economic instability, remain significant challenges.

This article is reprinted from the United Nations News Network, article address: 联合国贸发组织：2024年全球外国直接投资下降8% | | 1联合国新闻 (un.org)