FDI flows into developing economies slide to 18-year low in 2023

Foreign direct investment (FDI) flows into developing economies dropped to US$435 billion (S$557 billion) in 2023, the lowest since 2005, with just US$336 billion flowing into advanced economies, the lowest since 1996, the World Bank reported on June 16.

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WASHINGTON - Foreign direct investment (FDI) flows into developing economies dropped to US$435 billion (S$557 billion) in 2023, the lowest since 2005, with just US$336 billion flowing into advanced economies, the lowest since 1996, the World Bank reported on June 16.

It said growing investment and trade barriers, fragmentation and macroeconomic and geopolitical risks were depressing the outlook for FDI flows into developing countries, posing a threat to development efforts.

"The sharp drop in FDI to developing economies should sound alarm bells," Dr Ayhan Kose, the World Bank's deputy chief economist, said.

"Reversing this slowdown is not just an economic imperative — it's essential for job creation, sustained growth and achieving broader development goals."

The report noted that global and national recessions were associated with a significant deterioration in FDI, with FDI starting to weaken before a recession hit.