The United Nations trade agency reported a second year of decline in global foreign investment due to rising geopolitical tensions
The World Investment Report 2024 emphasized that lack of funding is hindering efforts to achieve the goal Agenda 2030 for sustainable development, emphasizing the urgent need for financial support policies.
“Investment is not just about capital flows; it is about human potential, environmental stewardship and the long-term pursuit of a more just and sustainable world,” said Rebeca Grynspan, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).
The report notes that the decline in FDI exceeds 10%, when excluding large fluctuations in investment flows in several leading European economies, with developing countries the hardest hit.
FDI slows down
According to UNCTAD, this decrease is mainly due to increased geopolitical tensions and concerns about “greenwashing”, a marketing practice aimed at making things appear more environmentally friendly than they actually are.
Foreign direct investment is important for financing infrastructure and public services such as electricity and renewable energy. However, tightening financial conditions in 2023 caused the number of FDI transactions to fall by 26%.
This the decline has caused a 10% decline in investment in related sectors Sustainable development goals (SDGs), most notably in agri-food systems, water and sanitation.
These sectors registered fewer internationally funded projects in 2023 than in 2015, when all countries sign up to the Goals to be achieved by 2030.
Developing countries are most affected
The report further revealed that developing countries are the worst affected.
These countries registered only modest growth in sustainable bonds last year and a 60% reduction in funding to the funds that support them.
FDI flows to developing countries fell 7% to $867 billion last year, but the decline varied across regions.
Green sector investment increases in Asia
Developing economies in Asia, home to 60% of the world’s megaprojects, have recorded a significant increase in new FDI – investments where a company establishes new operations or opens Expand existing facilities abroad.
These investments saw a 44% increase in overall value and a 22% increase in the number of such announcements.
However, total foreign investment flows into Asia have decreased, from about $678 billion in 2022 to $621 billion in 2023. However, the continent, led by East and Southeast Asia, continues to is the largest FDI recipient region in the world, accounting for nearly half of total foreign investment capital. global capital flows.
China and the Hong Kong Special Administrative Region (SAR) continue to be the largest investors in the region by total FDI capital, followed by the United States, Japan and Singapore.
