More than $140 billion of the increase came from conduit flows routed through financial centres. Excluding these, global FDI rose by only about 5 per cent, underscoring the continued fragility of underlying investment activity critical for long-term development.
At the same time, investor confidence remained subdued throughout the year. The value of cross-border mergers and acquisitions fell 10 per cent, while international project finance declined for a fourth straight year, down 16 per cent in value and 12 per cent in deal numbers to levels last seen in 2019.
Greenfield project announcements also dropped sharply by 16 per cent despite high headline values inflated by a small number of mega-projects. Overall, UNCTAD said the rebound reflects financial transactions more than a broad-based expansion in real investment.
However, FDI to developed economies surged 43 per cent to $728 billion, driven largely by Europe and financial hubs. The European Union (EU) recorded a 56 per cent increase, supported by large cross-border acquisitions and renewed inflows into major economies such as Germany, France and Italy.
In contrast, FDI to developing economies declined 2 per cent to $877 billion, although they still accounted for 55 per cent of global inflows. Around three-quarters of least developed countries experienced stagnant or falling investment.
Tariff exposure also weighed on project activity in globally integrated sectors like textiles, electronics and machinery, where project counts fell sharply. Meanwhile, major investments clustered in a handful of host countries, led by France, the US and the Republic of Korea, as well as emerging markets including Brazil, India, Thailand and Malaysia.
UNCTAD expects real investment to remain subdued amid geopolitical tensions, policy uncertainty and growing economic fragmentation.
Against this backdrop, attention is turning to global policy co-ordination aimed at restoring investor confidence and redirecting capital toward more productive, development-oriented uses, with the World Investment Forum, scheduled to be held in Doha in October 2026 under the theme ‘Investing in the Future,’ set to focus on mobilising investment for sectors and regions facing the most acute financing shortfalls.
Without renewed efforts to revive productive investment, UNCTAD cautioned, global FDI risks becoming increasingly concentrated in a few regions and sectors, limiting its contribution to inclusive and sustainable development.
ALCHEMPro News Desk (CG)
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