The flow of foreign direct investment to developing countries has fallen to its lowest level since 2005 amid rising trade barriers around the world. This indicator is a key factor in economic development and improving the welfare of the population. About this it is said in a new World Bank report.
“What we are seeing is the result of public policy. It is no coincidence that foreign direct investment is falling to new lows at the same time as public debt is at record highs.” – said Chief Economist and Senior Vice President of the World Bank Group Indermit Gill.
Gill explained that in recent years, governments around the world have focused on creating new barriers to investment and trade, when they should be reducing them. In 2023, the most recent year for which complete data was collected for analysis, developing countries attracted just $435 billion in foreign direct investment, the lowest since 2005. A similar trend of reduction is also observed in developed countries.
At the same time, these data do not take into account the latest changes related to the introduction of new trade barriers by the US administration and the corresponding reaction in other countries. In this regard, a meeting of representatives of governments, international organizations, institutions and the private sector will be held in Seville, Spain, from June 30 to July 3, where they will discuss ways to mobilize financing to achieve key development goals.
The World Bank plans to present an analytical report on the policies needed to achieve these goals in the face of slowing economic growth, record public debt and shrinking international aid. Easing investment restrictions should become a key element of this policy.
Earlier, the World Bank lowered its global economic growth forecast for 2025 to 2.3% due to increased trade barriers and increased uncertainty for most economies. This year’s growth will thus be the slowest since 2008, excluding periods of recession.
At the same time, the International Monetary Fund predicts that by 2030, public debt in the world will grow to almost 100% of global GDP due to American import duties and a slowdown in economic development.
