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Global FDI Rebounds in 2025, Driven by Financial Flows and Data Centre Investment
Global foreign direct investment increased by 14 percent in 2025 to reach $1.6 trillion, ending a two-year decline, according to the latest Global Investment Trends Monitor from UN Trade and Development. However, much of the recovery was attributed to financial transactions routed through investment hubs rather than a broad-based rise in new productive activity.
UNCTAD estimated that more than $140 billion of the increase came from conduit flows through major financial centres, suggesting that underlying investment activity expanded by only about 5 percent. The organisation noted that headline figures therefore overstated the strength of the recovery.
FDI inflows to developed economies rose sharply, climbing 43 percent to $728 billion, with Europe leading the increase. In contrast, flows to developing economies fell by 2 percent to $877 billion, further widening the gap between advanced and emerging markets. Around three-quarters of the world’s least developed countries experienced stagnant or declining investment inflows during the year.
Several indicators linked to real economic activity remained weak. The value of cross-border mergers and acquisitions declined by 10 percent, international project finance fell for the fourth year in a row, and announcements of new greenfield projects dropped by 16 percent.
Investment became increasingly concentrated in capital-intensive sectors. Data centre projects exceeded $270 billion in value, accounting for more than one-fifth of global greenfield investment. Semiconductor investment rose by 35 percent, while spending fell significantly in sectors exposed to tariffs and global value chains, including textiles, electronics and machinery.
Large technology projects backed by Gulf-linked investors featured prominently. MGX, supported by the United Arab Emirates, announced a $43 billion plan to build an artificial intelligence campus in France, ranking among the largest greenfield investments worldwide in 2025. Saudi Arabia was also among the few high-income Asian economies to record higher FDI inflows during the year.
Despite the overall rise in FDI, international infrastructure investment weakened further. The value of renewable energy projects dropped by 28 percent as investors reassessed revenue prospects and regulatory risks. International project finance fell to levels not seen since 2019, raising concerns for countries that depend on foreign capital to fund major infrastructure and development initiatives.
Looking ahead, UNCTAD said FDI could increase modestly in 2026 if borrowing costs continue to decline and merger activity recovers. However, it cautioned that real investment was likely to remain subdued due to geopolitical tensions, policy uncertainty and growing economic fragmentation, increasing the risk that global investment becomes concentrated in a limited number of regions and sectors.
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