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Investing.com -- Global foreign direct investment (FDI) dropped for the second consecutive year in 2024, with the United Nations agency for trade and development (UNCTAD) warning that 2025 could be worse due to rising trade tensions affecting investor confidence.
According to a report published by UNCTAD on Thursday, FDI transactions declined by 11% when excluding several European conduit economies, pointing to a substantial reduction in actual productive investment activity.
UNCTAD Secretary-General Rebeca Grynspan told Reuters that geopolitical tensions and trade fragmentation created uncertainty last year, which she described as a "poison" for investor confidence.
"We are even more worried about the picture in 2025...We already feel that investment is halted...Tariffs are affecting growth," Grynspan said, noting that short-term risk management is now taking priority over long-term investment.
The outlook for international investment in 2025 is negative due to ongoing trade tensions, with early data for the first quarter of 2025 showing record low deal and project activity.
When including European conduit economies - which serve as intermediary hubs where investments temporarily pass through before reaching final destinations - FDI actually increased by 4% to $1.5 trillion in 2024.
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