UN Secretary-General Antonio Guterres has warned that globalisation is retreating, as foreign direct investment (FDI) continues to decline following escalating trade tensions.
Speaking on Thursday, Guterres said worsening trade disputes and geopolitical uncertainty are damaging prospects for international cooperation and sustainable development.
The UN Conference on Trade and Development (UNCTAD) released its 2025 World Investment Report, revealing that FDI fell for a second consecutive year and is expected to continue its downward trajectory. The report highlighted that when adjusted for erratic financial flows through parts of Europe, global FDI dropped 11 per cent last year to $1.5 trillion.
“At a moment when global cooperation should be expanding, we’re seeing the opposite,” Guterres said. “Trade barriers are rising, globalisation is retreating, and the consequences for sustainable development are significant.”
The UN chief blamed the continuing tariff conflict initiated by US President Donald Trump for much of the uncertainty clouding the investment outlook for 2025.
“Growing trade tensions, political instability, and geopolitical divisions are further undermining investor confidence,” he added.
UNCTAD Secretary-General Rebeca Grynspan, speaking at the launch of the report, described its findings as a “clear and urgent” warning about the fragile state of global investment.
She noted that although 2024 had shown tentative signs of trade recovery after the COVID-19 pandemic, those hopes have been dashed by the current instability.
“The problem is, we see no resolution in sight for the trade war launched by Trump in April,” Grynspan said.
According to the report, developed economies saw the steepest declines, with FDI falling by 22 per cent and plunging 58 per cent in Europe alone. North America was the exception, experiencing a 23 per cent increase in FDI, driven by stronger inflows into the United States. In contrast, developing countries managed to maintain relatively stable investment levels.
UNCTAD warned that the combination of trade fragmentation, heightened industrial policy competition, and global political tensions is steadily eroding investor confidence, leaving the global FDI outlook bleak for the foreseeable future.
