GLOBAL FOREIGN DIRECT INVESTMENT TRENDS IN 2025: CHALLENGES AND OPPORTUNITIES FOR SUSTAINABLE ECONOMIC DEVELOPMENT

Foreign Direct Investment (FDI) has been historically regarded as an essential part of economic growth as it provides capital accumulation, technological change, higher productivity, new employment and further integration into world economy.1 Moreover, through FDI, states benefit from access to finance, managerial skills, new technological endowments and global production networks conducive to sustainable development. Nevertheless, in recent years, the global FDI environment has been largely affected by fluctuating geopolitical conflicts, disruption of trade, inflationary shocks, monetary tightening and economic uncertainty.2 As indicated by the 2025 UNCTAD report, global FDI plunged 3 per cent during the first six months of 2025, following the 11 per cent decrease in 2024,3 reflecting a persistent deceleration in international investment trends. The downward trend proved to be even more depressed in developed nations where the foreign investment flows fell 7 per cent in 2025, whereas the developing economies experienced a mixed pattern of capital flows. Significant falls were observed in infrastructure finance, manufacturing investment and cross border mergers and acquisitions, intensifying doubts about the ability of many nations to finance their development projects and accomplish the Sustainable Development Goals (SDGs).In this paper, we seek to address the recent phenomena of decreasing cross-border investment flows and on this basis, present possible consequences for sustainable development and economic growth.