Global FDI jumps 14% in 2025 to $1.6 trillion, UNCTAD says

Global foreign direct investment (FDI) rose 14 per cent in 2025 to $1.6 trillion, rebounding after two years of decline, but the recovery was driven largely by financial flows through investment hubs rather than new productive projects, the United Nations said on Tuesday.

More than $140 billion of the increase came from so-called conduit flows through global financial centres, meaning underlying investment activity grew by only about 5 per cent, according to the latest Global Investment Trends Monitor from UN Trade and Development (UNCTAD).

Financial flows drive FDI surge

FDI flows to developed economies surged 43 per cent to $728 billion, led by Europe, while flows to developing economies fell 2 per cent to $877 billion, widening the gap between advanced and emerging markets. Three-quarters of the world’s least developed countries recorded stagnant or declining inflows, the report showed.

UNCTAD said headline growth overstated the strength of the recovery, citing persistent weakness in indicators tied to real economic activity. The value of cross-border mergers and acquisitions fell 10 per cent in 2025, international project finance declined for a fourth consecutive year, and the number of new greenfield project announcements dropped 16 per cent.

Investment was increasingly concentrated in a small number of capital-intensive sectors, particularly data centres, which accounted for more than one-fifth of global greenfield investment by value, exceeding $270 billion. Semiconductor project values rose 35 per cent, while investment fell sharply in tariff-exposed, global value chain-intensive sectors such as textiles, electronics and machinery.

Several Gulf-linked investors featured prominently in large-scale technology projects. MGX, backed by the United Arab Emirates, announced a $43 billion investment to build an AI campus in France, making it one of the largest greenfield projects globally in 2025, UNCTAD data showed. Saudi Arabia was among a small group of high-income economies in Asia to record higher FDI inflows during the year.

FDI rises, infrastructure investment falls

Despite the rise in aggregate figures, international infrastructure investment weakened further, with renewable energy project values falling 28 per cent as investors reassessed revenue risks and regulatory uncertainty. International project finance dropped to levels last seen in 2019, raising concerns for countries that rely on foreign capital to fund large infrastructure and development projects.

UNCTAD said FDI flows could rise modestly in 2026 if borrowing costs continue to ease and merger activity picks up, but warned that real investment activity was likely to remain subdued amid geopolitical tensions, policy uncertainty and economic fragmentation.

“Without coordinated action, global investment risks becoming more concentrated in a few regions and sectors,” the report said, calling for renewed focus on productive, development-oriented investment rather than financial flows alone.