Based on preliminary estimates, global foreign direct investment (FDI) rose 14% in 2025 to $1.6 trillion. But a big share of the increase came from flows through global financial centres. Real investment activity remained fragile.
Investment patterns point to widening divides between developed and developing economies, growing concentration in a handful of strategic sectors and persistent weakness in projects most critical for sustainable development.
Growth driven by financial centres
More than $140 billion of the increase in global FDI came from higher flows through global financial centres. Without these “conduit flows”, global FDI rose by only about 5%, underlining the limited recovery in underlying investment activity.
Indicators of investor sentiment remained weak.
- The value of international mergers and acquisitions fell by 10%.
- International project finance declined for the fourth consecutive year (-16% in value and –12% in deal numbers), falling to levels last seen in 2019.
- The number of greenfield project announcements dropped by 16%, despite high total project values driven by a small number of mega-projects.
The message is clear: headline growth overstates the recovery. Policymakers should focus on reviving real investment, not just financial flows.
Developed economies pull ahead as developing countries fall behind
FDI flows to developed economies jumped 43% to $728 billion in 2025, driven by Europe and financial hubs. The European Union recorded 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, accounting for 55% of global FDI. Lower-income countries were hit hardest. Three quarters of least developed countries saw stagnant or declining flows.
The growing concentration of FDI in capital-intensive, technology-driven projects is making it harder for poorer countries to compete. Addressing financing constraints, reducing risk perceptions and strengthening investment frameworks remain critical.
Data centres reshape the global investment landscape
Data centres accounted for more than one fifth of global greenfield project values in 2025, with announced investment exceeding $270 billion. Demand was driven by AI infrastructure and proprietary digital networks.
The value of newly announced semiconductor projects rose by 35%. By contrast, project numbers fell sharply in tariff-exposed, global value chain-intensive sectors (-25%), particularly textiles, electronics and machinery.
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.
While these investments lift overall figures, they 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.
Infrastructure and renewable energy investment continue to weaken
International infrastructure projects fell by 10%, largely due to 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 and SDG-related projects.
Outlook for 2026 is highly uncertain: fragile recovery possible amid rising concentration
Looking ahead, downside risks are mounting. 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 are becoming more concentrated in a few regions and sectors. Reviving development-oriented investment will require reducing uncertainty, strengthening international cooperation and refocusing policies on productive, sustainable projects.
