Global FDI Decline Threatens Developing Economies

Foreign direct investment (FDI) flows into developing economies have plummeted to $435 billion in 2023, marking the lowest point since 2005, according to the World Bank's latest report. Similarly, advanced economies saw their FDI fall to $336 billion, a low not reached since 1996.

The World Bank highlighted that rising investment barriers, along with macroeconomic and geopolitical risks, are detrimental to FDI flows into developing countries. "The steep drop warrants serious attention," said Ayhan Kose, the organization's deputy chief economist, emphasizing the critical necessity for FDI in job creation and sustainable growth.

Recommending structural reforms and global cooperation, the report calls for countries to dismantle restrictions to enhance the investment climate. Released shortly after a downgraded global economic forecast, the report also highlights that governments have compounded the issue by increasing trade barriers, further hindering economic recovery.

(With inputs from agencies.)