Global Investment Trends Monitor, No. 47

Following a decline in 2023, global foreign direct investment (FDI) remained weak in the first half of 2024 amid a challenging international investment environment.

Global FDI trends: Mid-year 2024 update

• Preliminary data show a slight 1% rise in global FDI, excluding European conduit economies that serve as transfer points before investment flows reach their final destination. Including these economies, FDI rose by 25%.
• International project finance continued its downward trend, with deal numbers and values down by 30%. New industrial project announcements fell by 10% and infrastructure by a third due to higher financing costs and inflation in some markets.
• Cross-border merger and acquisitions (M&As) values declined by 5%, though transaction numbers edged up 1%, signaling a possible halt to the slide seen over the past two years.
• Greenfield investment project announcements declined by 11% in number and 4% in value compared to the half-year average of 2023. These projects, through which companies set up operations in a foreign country, create jobs and bring new infrastructure and skills.

Developed economies: Key FDI trends

• Excluding conduit economies, FDI to Europe rose 5%. Inflows climbed 8% in Germany and 16% in France – the two largest EU markets – but declined in Italy, Poland and Sweden.
• In North America, FDI grew 9%, led by higher flows to the United States (+7%), where cross-border M&A values doubled, driven by megadeals in the finance and utilities sectors.
• Greenfield project announcements in developed economies dropped 11% in number but rose 20% in value. The decline was largely due to fewer ICT projects, while energy and gas saw a 5% increase after nearly doubling in 2023. The overall value growth was driven by a doubling of project values in the US (with the EU down 25%), including major announcements in the semiconductor industry, reflecting continued efforts to diversify supply chains and boost domestic production.
• International project finance deals in developed economies fell by 37%, continuing the downward trend observed in 2023. Only five countries saw an increase in projects. Drops in projects in renewable energy and industrial real estate accounted for nearly 60% of the overall reduction.

Developing economies: Key FDI trends

• FDI flows to developing economies rose by 5%, mainly due to a $35 billion project in Egypt. Without it, flows would have decreased by 3%, continuing the decline observed in 2023.
• Greenfield investments in developing countries saw an 11% decline in number and 24% drop in value. The increase in manufacturing projects observed in 2023 did not carry over into 2024, with project values and numbers falling by 27% and 8%, respectively. Major declines were seen in the automotive sector (-39% in value and -16 in number) and energy and gas supply (-36% in both value and number).
• International project finance in developing countries fell 25%, following a similar decline in 2023. The downturn was widespread across most industries. Notably, projects in renewable energy, which still accounted for half of all deals in developing economies, saw a drop in number (-17%) and value (-19%).
• Cross-border M&A sales in developing countries plummeted 53% to $18 billion, falling to levels not seen since 2009.

Global FDI outlook for the remainder of 2024

The global investment environment remains challenging, with geopolitical and economic fragmentation posing hurdles.

Nonetheless, easing financial conditions and robust corporate profitability may support modest FDI growth by year-end.