Global FDI rebounds in 2025 as inflows concentrate in developed countries: Global foreign direct investment (FDI) rose 14% y-o-y last year to USD 1.6 tn, marking a rebound after two consecutive years of decline, according to preliminary UN Trade and Development data in its Global Investment Trends Monitor report (pdf). However, the heavy skew toward developed economies and financial centers, without which inflows rose by just 5%, increased. FDI to developing economies fell 2% y-o-y to USD 877 bn.

Developed economies saw the biggest FDI increase, up 43% y-o-y to USD 728 bn, and accounting for the bulk of global growth. The US remained the biggest recipient of FDI, with flows rising 2%, while the EU saw a massive 56% increase in capital allocations, supported by large cross-border M&As and strong inflows into Germany, France, and Italy.

The widening discrepancy comes as FDI flows grow more concentrated in large-scale data centers — which attracted one-fifth of flows into greenfield projects — and other tech-intensive sectors that are more feasible in higher-income countries, the report said. Financing constraints, risk perceptions, and structural vulnerabilities also added to the problem.

Of the FDI flows to developing economies last year, most were concentrated in three countries: the UAE, Singapore, and Hong Kong, which accounted for over a third of total FDI inflows to developing economies.

The UAE also featured prominently on the outbound side, particularly in technology-driven megaprojects. The report cited big-ticket investments, with Abu Dhabi AI investor MGX’s USD 43 bn AI campus project in France being the largest greenfield project last year. The Stargate UAE AI data center project was included among the biggest 10 international agreements, while Adnoc’s USD 14.3 bn takeover of Germany’s Covestro was also flagged.

On the other hand, sectors that are exposed to tariffs and are heavily reliant on international supply chains — like electronics, textiles, and machinery — saw a dip on the back of tariff uncertainty, while a downturn in renewables investment led international infrastructure investment to dip 10%.

For 2026, eased borrowing costs, an uptick in M&A, and improved inflation figures could lead to an increase in FDI. However, downside risks remain from conflicts and geopolitical tension, as well as global economic tensions and polarization. It’s looking likely that semiconductors and data centers will be the FDI darlings yet again this year.

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