ISLAMABAD: Global foreign direct investment (FDI) fell three per cent in the first half of 2025, extending a two-year slump, as trade tensions, high interest ra­­tes, and geopolitical uncertainty kept investors cautious, the UN Conference on Trade and Development said in its latest ‘Global Investment Trends Monitor’.

The drop was driven by developed economies, where cross-border mergers and acquisitions (M&As) — which normally make up a large share of their FDI — fell 18pc to $173 billion.

Developing economies fared better overall, with flows remaining flat. But trends diverged by region. Inflows rose 12pc in Latin America and the Caribbean and 7pc in developing countries in Asia, but fell 42pc in Africa.

High borrowing costs and economic uncertainty continued to squeeze investment in industry and infrastructure in the first half of 2025.

Announcements of gre­en­field projects — when firms build new operations abroad — fell 17pc in number, driven by a 29pc decline in supply-chain-intensive manufacturing such as textiles, electronics and automotive, amid tariff uncertainty.

International project fin­ance — critical for infrastructure development — also declined, with deal numbers down 11pc and value 8pc.

The trend was more positive in developing economies, where project finance deals fell only 2pc after two years of sharp declines.

Published in Dawn, November 2nd, 2025