Shifting Trends in Foreign Direct Investments
The last year has proven to be a roller-coaster ride for foreign direct investment (FDI). The new normal is characterized by political and economic shocks, with tariffs, geopolitical conflict, and technological changes resulting in profound disruptions. More than ever, these changes have brought about new priorities and altered the fundamental logic that drives FDI flows.
Mikael Wigell, CEO of the Economic Security Forum, has discussed these shifts in an opinion piece. He highlights that governments across advanced economies no longer perceive efficiency as the ultimate virtue. Instead, they balance it against security, resilience, and strategic advantage. This leads to a new paradigm: strategic capitalism. In this system, states actively direct investment to enhance national security, technological capacity, and geopolitical leverage.
These shifts, however, do not uniformly manifest themselves. They vary based on a multitude of factors, including location, historical circumstances, and institutional strength. Below is a compilation of thoughts from various global experts who forecast what FDI will look like in 2026.
Europe: AI Industry Gains Momentum Amid Uncertainty
Guilehm Delon-Saumier, project manager at OCO Global, foresees a significant decline in FDI project volumes in Europe in 2025 compared to 2024. He predicts a subdued outlook for 2026 as well. Investor decisions are increasingly burdened by macro-level pressures such as tariff measures by the US, persistent regional conflicts, political instability, budget crises in several European countries, and an overall weak economic climate across the EU. These factors are delaying or deferring many cross-border investment plans.
Although industrial projects in Western Europe are likely to continue decreasing, the impact is now spreading to other activity types. Green tech and renewable-energy investments, strong drivers of European FDI in recent years, are being directly affected by reduced public funding as governments apply stricter budgetary constraints. Conversely, AI-related investment continues to gain momentum across all sectors. Western Europe, with its strong research and development capabilities and deep engineering talent pools, continues to attract international companies seeking to establish advanced research, data, and engineering hubs.
Africa: Regional Insecurity and Uneven FDI Attraction Persist
Amne Suedi, managing director of Swiss Shikana Investment and Advisory Sarl, observes that FDI approvals in East Africa reached approximately $4.9bn in Q3 2025, indicating one of the strongest quarterly performances in recent years. However, political developments will determine how much of this momentum will carry into 2026. Post-election violence in Tanzania following the 2025 polls, along with reactions from development partners, has introduced caution among foreign investors that traditionally view Tanzania as one of the region’s most predictable environments. Uganda’s 2026 elections, historically characterized by tension and civil-society crackdowns, are likely to trigger temporary delays in capital deployment as investors monitor the pre-election trajectory.
Regional security conditions will further shape the FDI outlook. Developments in Q3 2025 show that the DRC-Rwanda security situation remains unstable, affecting critical mining corridors relied upon by global commodity markets. Somalia continues to grapple with insurgent activity, while South Sudan’s fragile peace and intermittent armed clashes periodically disrupt oil production. These factors create a multidimensional risk environment that investors now integrate into project assessments, financing structures, and time horizons. Even so, the underlying fundamentals of the region – industrialisation corridors, large-scale energy investments, digital integration, and rising intra-African trade – remain robust.
APAC: Supply Chain Restructuring and a Booming Digital Economy Benefit the Region
Andrew Keable, co-founder and owner at KW Group Asia-Pacific FDI, notes that despite a global decline in investment in 2025, the 11-member Association of Southeast Asian Nations (ASEAN) bloc continues to attract increasing capital for advanced manufacturing, semiconductors, batteries, data centres, and large-scale green energy projects. The region boasts a rapidly growing digital economy, set to hit $1tn by 2030, and a young population of almost 680 million people. Furthermore, companies are restructuring their supply chains to avoid geopolitical tensions with China, the US, and Europe, leading to steady FDI inflows and strong investor pipelines.
Middle East: Core GCC Nations to Lead the Region and Set the Pace of AI
Osama Al Isawi, deputy program manager at PA Consulting, predicts that by 2026, the Middle East will be defined by its position in the global hierarchy of capital, compute, and connectivity. The region’s data centre market is currently valued at $3.5bn and is projected to reach roughly $9.5bn by 2030, with Saudi Arabia holding around 40% of the 2025 market and the UAE growing the fastest. FDI in the region will increasingly take the form of joint AI platforms and sovereign cloud partnerships rather than traditional bricks and mortar projects.
North America: USMCA Review, World Cup, and the Mid-Terms, and Operationalisation of Industrial Policy
According to Mary Martens, FDI and lead generation manager for North America at OCO Global, three inflection points will define 2026: the July United States-Mexico-Canada Agreement (USMCA) review, the contrasting signals of the World Cup’s infrastructure-driven momentum versus the hesitation typical of US mid-terms, and the operationalisation of industrial policy. Sectors tied to long-horizon strategies like semiconductors, electric vehicle supply chains, energy storage, and AI automation remain resilient, but tariff-exposed industries are likely to delay commitments until trade politics stabilise.
LATAM: Regional Companies Drive Resilience But Trade Woes To Manifest in 2026
Marco Llinas, director of the UN Economic Commission for Latin America and the Caribbean division of productive and industrial development, notes that despite signs of recovery following pandemic-induced contraction, current FDI levels remain below the peaks observed between 2010 and 2014. The 2024 bump was mostly fuelled by reinvested earnings from companies already operating in the region, rather than equity flows from external sources. However, FDI project announcements suggest that the uncertainty generated by changes in US trade policy is already weighing on future expansion plans in the region.
These comments have been edited for clarity and length. Source Here
