Restore investor confidence to improve FDI inflows

Editor's Note: Global foreign direct investment fell by 11 percent to about $1.5 trillion in 2024, marking the second consecutive year of decline. Nevertheless, there were some bright spots of growth in certain areas such as the digital economy. What do the current global investment trends indicate? Compared with developed countries, what advantages do developing countries have in attracting foreign investment? Will the global FDI outlook improve this year? Li Nan, director of the Division on Investment and Enterprise, United Nations Trade and Development, spoke to Chinanews.com on these issues. Below are excerpts from the interview. The views don't necessarily represent those of China Daily.

Global FDI declined in 2024 mainly due to a 58 percent year-on-year fall in inflows to Europe. The decline reflected the severe impact of geopolitical tensions and financial market instability on investor confidence. In addition, international project finance, which plays a critical role in infrastructure investment, dropped by 11 percent in Europe, underscoring investors' broader caution and the generally tighter financial environment.

In contrast, inflows to developing countries remained relatively stable. In 2024, developing economies accounted for 57 percent of global FDI inflows. Their total FDI reached $867 billion, roughly unchanged from the previous year. This highlights the resilience of developing countries against a backdrop of continued global uncertainty, tighter financial conditions and weak trade. FDI inflows to developing economies were highly concentrated, reflecting the difficulties faced by smaller and more vulnerable economies in attracting international investment.