UNCTAD Report
SHIFTING GLOBAL economic dynamics have significantly impacted Foreign Direct Investment (FDI), with Africa witnessing an 84% surge, largely attributed to a megaproject in Egypt.
According to the latest report by the United Nations Conference on Trade and Development (UNCTAD), without this single project, the continent’s FDI grew modestly by 23%, totalling $50 billion.
Globally, FDI increased by 11% to an estimated $1.4 trillion in 2024.
However, when adjusted to exclude investments routed through European conduit economies, the figure reflects an 8% decline.
These economies, often acting as intermediaries for capital flows, illustrate the volatility and uncertainty shaping the global investment landscape.
The “Global Investment Trends Monitor” report reveals divergent trends between developed and developing regions.
In North America, FDI rose 13%, bolstered by an 80% spike in mergers and acquisitions (M&A) in the United States.
Greenfield investments—new projects in foreign markets—experienced remarkable growth, rising by 93% in the US to $266 billion, with semiconductor megaprojects playing a critical role.
The United Kingdom followed suit, recording a 32% increase in greenfield investments to $85 billion, while Italy saw a 71% surge, reaching $43 billion.
Europe, on the other hand, struggled with a 45% drop in FDI, excluding conduit economies.
Among European Union nations, 18 of 27 reported declines. Germany’s FDI plummeted by 60%, while Italy experienced a 35% decrease.
Greenfield investments across Europe fell by 10%, though the overall value of large-scale projects rose by 15%, signalling a reliance on a few high-impact investments.
Developing economies faced their second consecutive annual FDI decline, down 2% in 2024.
This trend threatens the Sustainable Development Goals (SDGs), which heavily depend on international financing.
Investments in SDG-related sectors dropped 11%, with fewer projects in agrifood, infrastructure, and water and sanitation compared to 2015, the year the goals were adopted.
Asia, as the largest FDI recipient among developing regions, recorded a 7% decline. China faced a stark 29% drop, pushing inflows to 40% below their 2022 peak.
However, India saw a 13% rise, buoyed by growth in greenfield project announcements. ASEAN nations collectively achieved a 2% increase in FDI, reaching a record $235 billion.
In Latin America and the Caribbean, FDI dipped 9%, led by a 5% decline in Brazil. Despite this, greenfield projects in Brazil, Argentina, and Colombia showed an uptick in numbers and values, hinting at a potential recovery.
Mexico demonstrated resilience, with FDI rising 11%, even as regional project announcements weakened.
Looking ahead to 2025, UNCTAD forecasts moderate FDI growth, driven by improved financing conditions and renewed M&A activity.
However, risks such as geopolitical tensions and global economic instability remain significant challenges.
