World Bank Reports Drop of FDI in Developing Markets

(MENAFN) The World Bank announced on Monday that foreign direct investment (FDI) in developing markets dropped to USD435 billion in 2023—the lowest level observed since 2005.

This sharp decrease is attributed to intensifying global restrictions on trade and investment.

"These barriers pose a significant threat to global efforts to mobilize financing for development," stated the World Bank, underlining the serious impact such policies are having on worldwide financial cooperation.

The report pointed out that this drop reflects a wider international pattern, where even wealthy countries have seen a marked reduction in incoming investments. In fact, high-income nations collectively secured only USD336 billion in 2023, representing the lowest figure since 1996.

According to the bank, "As a share of their gross domestic product (GDP), FDI inflows to developing economies in 2023 were just 2.3 percent, about half the number during the peak year of 2008," emphasizing the shrinking role of foreign capital in these regions.

While noting that legal investment frameworks can boost international capital flow by over 40 percent, the bank revealed that just 380 new investment treaties became active between 2010 and 2024. This is roughly a third of the number seen in the 1990s.

Similarly, the quantity of newly signed trade agreements has sharply declined in recent years, falling from an annual average of 11 during the 2010s to only 6 per year since the 2020s began.

The statement concluded by affirming that foreign investment serves as a vital engine for economic expansion when supported by appropriate conditions, though such capital typically gravitates toward the world’s largest economies.

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