By Tuba Ongun
Global foreign direct investment (FDI) flows dropped 2% to $1.3 trillion in 2023 amid an economic slowdown and escalating geopolitical tensions, according to a report from UN's trade and development body on Thursday.
"Weakening growth prospects, economic fracturing trends, trade and geopolitical tensions, industrial policies and supply chain diversification are reshaping FDI patterns, causing some multinational enterprises (MNEs) to adopt a cautious approach to overseas expansion," the UN Trade and Development (UNCTAD) said in the World Investment Report 2024.
The figure is projected to grow modestly as the MNE profit levels remain high, financing conditions are easing and greenfield project announcements increased.
International project finance deals, crucial for infrastructure investment, plunged 26% due to tight financing conditions,
FDI flows to developing countries fell 7% from the prior year to $867 billion, reflecting an 8% decline in developing Asia. This figure decreased by 3% in Africa and by 1% in Latin America and the Caribbean.
On the other hand, flows to developed countries rose 9% to $464 billion.
Inflows to structurally weak and vulnerable economies or least developed countries, on the other hand increased to $31 billion last year.