Himal Press 
KATHMANDU: Global foreign direct investment (FDI) fell by 11% in 2024, marking the second straight year of decline and signaling a deepening slowdown in productive capital flows, according to the World Investment Report 2025. Total FDI fell to $1,493 billion in 2024, compared to $1,673 billion in 2023.
Although total FDI rose modestly by 4% to $1.5 trillion, the increase was largely attributed to volatile financial conduit flows in several European economies—investment transfers that do not reflect genuine productive activity. The report warns that the overall trend highlights an urgent need to reform global finance systems to support inclusive, long-term development.
“Too many economies are being left behind not for lack of potential, but because the system still sends capital where it’s easiest, not where it’s needed,” said UNCTAD Secretary-General Rebeca Grynspan. “But we can change that. If we align public and private investment with development goals and build trust into the system, today’s volatility can become tomorrow’s opportunity.”
Developed Economies Lead the Decline
FDI to developed economies fell sharply, down 22% overall, with Europe suffering a 58% plunge. North America bucked the trend, registering a 23% increase, led primarily by the United States.
In developing countries, FDI inflows remained relatively stable on the surface, but UNCTAD warns that this conceals a more serious crisis: in many economies, capital is stagnating or bypassing critical sectors like infrastructure, energy, and technology—the industries that drive job creation and development.
In Africa, FDI surged by 75%, largely due to a single mega-project in Egypt. Even without that project, inflows still rose by 12%, driven by investment facilitation reforms.
Asia remained the top FDI recipient globally, despite a 3% overall dip. Within the region, Southeast Asia saw inflows rise by 10%, reaching $225 billion—the second-highest level on record.
Latin America and the Caribbean experienced a 12% decline in FDI, though greenfield project announcements rose in countries such as Argentina, Brazil and Mexico.
The Middle East maintained a strong performance, supported by economic diversification efforts in the Gulf.
Trends, however, were mixed in structurally vulnerable economies. FDI rose by 9% in least developed countries (LDCs) and by 14% in small island developing states (SIDS). However, landlocked developing countries (LLDCs) saw a 10% decline.
Sectors tied to the Sustainable Development Goals (SDGs) were hit hardest. FDI flow to renewable energy, transport, and water and sanitation fell by 21%, 32% and 30%, respectively.
By contrast, FDI in the digital economy grew by 14%, driven by rising investment in ICT manufacturing, digital services, and semiconductors. However, this growth remains highly concentrated, with 10 countries accounting for 80% of all new digital projects. Most developing nations are being left out of the digital transformation due to persistent gaps in infrastructure, skills and regulatory frameworks, according to the report.
