Global foreign direct investment (FDI) rose 14% in 2025 to $1.6-trillion, rebounding after two weak years, although most of the increase came from financial flows through global hubs and not new productive investment, says international trade organisation UN Trade and Development (Unctad).

More than $140-billion of the increase came from higher flows through global financial centres. Excluding these conduit flows, global FDI rose by about 5%, thereby highlighting how limited the recovery remains in underlying investment.

Investor sentiment indicators also remained weak throughout the year. The value of international mergers and acquisitions fell by 10%, while international project finance declined for a fourth consecutive year, dropping 16% in value and 12% in deal numbers to levels last seen in 2019.

Greenfield project announcements fell sharply by 16% despite high total values that were driven by a small number of megaprojects.

The overall picture points to a rebound driven more by financial transactions than by broad-based investment expansion, Unctad says.

Further, FDI to developed economies surged, while flows to developing countries declined.

FDI flows to developed economies jumped by 43% to $728-billion, driven by Europe and financial hubs. The EU recorded a 56% increase, supported by large cross-border acquisitions and a rebound in economies including France, Germany and Italy.

By contrast, flows to developing economies declined by 2% to $877-billion, and accounted for 55% of global FDI. Lower-income countries were hit hardest, with three-quarters of least developed countries experiencing stagnant or declining inflows.

Additionally, international infrastructure investment fell by 10% in 2025, largely owing to a sharp pullback in renewable-energy projects, as investors reassessed revenue risks and regulatory uncertainty.

Domestic investors increasingly filled part of this gap. However, this presents the risk that this shift could widen investment shortfalls in countries that rely on international finance for large-scale infrastructure and development-related projects, Unctad notes.

Meanwhile, investment is becoming increasingly concentrated in a handful of strategic, capital-intensive sectors. Data centres accounted for more than one-fifth of global greenfield project values in 2025, with announced investment exceeding $270-billion, and driven by demand for AI infrastructure and digital networks.

Further, semiconductor project values rose 35%, although project numbers fell sharply in tariff-exposed, global value-chain-intensive sectors, such as textiles, electronics and machinery.

Additionally, major projects were concentrated in a small number of host countries, led by France, the US and South Korea, with emerging markets such as Brazil, India, Malaysia and Thailand also attracting large investments.

Meanwhile, FDI flows could increase modestly this year, if financing conditions continue to ease and cross-border mergers and acquisitions recover, it says.

However, the organisation expects real investment activity to remain subdued, weighed down by geopolitical tensions, policy uncertainty and economic fragmentation.

Without action to revive productive investment, global FDI risks becoming more concentrated in a few regions and sectors, thereby limiting its contribution to development, it adds.

Against this backdrop of persistent uncertainty and increasingly fragmented investment flows, attention is now turning to how global policy dialogue can help restore confidence and redirect capital toward more productive uses.

Meanwhile, in October, the World Investment Forum will convene in Doha under the theme Investing in the Future. It will bring policymakers, investors and international institutions together to focus on how investment can better support development outcomes, particularly in countries and sectors where financing gaps are most acute.