The past year has been turbulent for foreign direct investment (FDI). Political and economic shocks are now the norm, as tariffs, geopolitical conflict and technological changes have gone from pointed disruptions to the new status quo.
In turn, this has created new priorities and changed the underlying logic driving FDI flows. Mikael Wigell, CEO of the Economic Security Forum, outlined this shift in an opinion piece for this publication earlier this year:
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“Across advanced economies, governments no longer view efficiency as the ultimate virtue but as one variable among others; balanced against security, resilience and strategic advantage. A new paradigm is emerging: strategic capitalism, a system in which states actively steer investment to strengthen national security, technological capacity and geopolitical leverage,” Wigell wrote.
Naturally, these shifts manifest differently depending on an array of factors – from location to historical circumstances to institutional strength. Below, we have gathered the thoughts of various experts from across the world about what FDI in 2026 has in store.
Europe: uncertainty will drive further decline, while the AI industry continues to gain momentum
Guilehm Delon-Saumier, project manager, location attractiveness & international corporate expansion, OCO Global
“From our day-to-day work supporting investors, we expect a significant decline in FDI project volumes in Europe in 2025 compared with 2024, and current indicators point to a subdued outlook for 2026 as well. Investor decisions are increasingly constrained by heavy macro-level pressures: the tariff measures developed by the US, persistent regional conflicts with no visible resolution paths, deep ongoing political instability and budget crises in several European countries (including France), and a generally weak economic climate across the EU. These factors are slowing or postponing many cross-border investment plans.
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By GlobalData“Industrial projects in Western Europe are likely to continue decreasing, but the impact is now spreading to other activity types. Green tech and renewable-energy investments, which were strong drivers of European FDI in recent years, are being directly affected by reduced public funding as governments apply stricter budgetary constraints.
“By contrast, AI-related investment is still gaining momentum across all sectors. Western Europe remains well positioned here, with strong research and development capabilities and deep engineering talent pools, which continue 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 and Honorary Consul of Switzerland in Tanzania
“Based on data and trend analysis compiled by my research team, FDI approvals in East Africa reached approximately $4.9bn in the third quarter of 2025 (Q3 2025), marking one of the strongest quarterly performances in recent years. However, political developments will influence how much of this momentum carries 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 characterised 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. My team’s analysis of Q3 2025 developments shows 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 – a major macroeconomic anchor for the country and a contributor to regional fiscal stability.
“Collectively, 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.”
Nisan Abdulkader, director of external affairs & communications at Shelter Afrique
“Infrastructure and energy remain magnets. Multilateral pledges and big electrification initiatives continue to channel project finance into power, transport and broadband – projects that promise scale and predictable cash flows attractive to long-term foreign capital. Expect continued interest from development banks and regional sovereigns partnering with private investors.
“Regional integration amplifies greenfield and manufacturing interest. As the Africa Continental Free Trade Area implementation deepens, investors seeking scale and integrated supply chains will increasingly place manufacturing and regional distribution bets in hub countries, especially in East and West Africa. However, gains will be gradual and uneven – integration lowers trade frictions over years, not months.
“Digital and services show promise, but pocketed reality. While global capital wants exposure to Africa’s digital leap, greenfield project numbers remain small relative to need. The tech sector will attract mergers and acquisitions (M&A), venture capital and platform plays, but measured greenfield infrastructure investment for connectivity will still trail. Expect private equity and strategic tech partners to lead rather than large-scale greenfield financiers.
“Volatility and concentration persist. 2024’s gains masked fragility: by mid-2025, some flows softened amid global uncertainty. In 2026, capital will favour countries with clearer macro frameworks, better governance and bankable projects – reinforcing a pattern where a handful of countries attract a disproportionate share of FDI.”
APAC: the region benefits from supply chain restructuring and a booming digital economy
Andrew Keable, co-founder and owner at KW Group Asia-Pacific FDI, expert FDI consultant for United Nations Economic and Social Commission for APAC
“Despite declining global investment in 2025, the now 11-member Association of Southeast Asian Nations (ASEAN) bloc (with Timor-Leste joining officially in 2025) continues to attract increasing capital for advanced manufacturing, semiconductors, batteries, data centres and large-scale green energy projects. The region has nearly 680 million people, most under 35, and a fast-growing digital economy that is on track to hit $1tn by 2030.
“Add to that companies spreading their supply chains to avoid geopolitical tensions with China, the US and Europe, and the region is moving towards production that is firmly ‘anchored in Asia’. This is feeding steady FDI inflows, strong investor pipelines, and a deepening portfolio of investor-ready industrial parks and special economic zones, with many next-tier emerging markets such as Cambodia and Laos offering increasingly viable alternatives to the traditional markets in the region – and with increasing green energy in place, these are the next growth hot spots.
“Asia is driving its own trade and investment, even though Western markets don’t fully recognise it. China–ASEAN trade alone is approaching $1tn annually, far higher than US–ASEAN trade, which is around $570–575bn when goods and services are combined. Much of this trade involves intermediate goods and supply chain components, which makes it less visible outside Asia. For Western companies and investors, it is important to know ASEAN isn’t one single market like the EU. Each country has its own rules, incentives and infrastructure, so success means understanding local differences and adjusting your approach.
“ASEAN is on track to become the world’s fourth-largest economy by 2030, and 2026 looks set to bring plenty of focused, high-quality investment opportunities. These will come from regional integration, a large young population and a fast-growing digital economy – chances that many outside Asia still overlook.”
Middle East: core GCC nations will lead the region and set the pace of AI
Osama Al Isawi, deputy program manager at PA Consulting— FDI, strategy, and impact investment
“By 2026, FDI in the Middle East will be defined by where it sits in the global hierarchy of capital, compute and connectivity. Global FDI fell 11% in 2024, on a like-for-like basis, to around $1.5tn, yet flows to West Asia/Middle East stayed at high levels, underpinned by strong inflows into the United Arab Emirates (UAE) and Saudi Arabia. The Middle East will have split into a Gulf Cooperation Council (GCC) core that sets the tempo for global FDI in AI infrastructure, green energy and logistics, and a ring of reforming markets such as Egypt and Jordan that offer higher risk but outsized, Gulf-anchored special situations.
“The centre of gravity within that GCC core is shifting toward AI infrastructure; the group’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 fastest. During the second half of this decade, compute, data residency and access to advanced chips will sit at the heart of the region’s economic ties with the US. FDI will increasingly take the form of joint AI platforms and sovereign cloud partnerships rather than traditional bricks and mortar projects.
“In the first nine months of 2025, the Middle East and North Africa’s sovereign wealth funds (SWF) deployed $56.3bn across 97 deals, accounting for roughly 40% of global SWF deal-making, with the US as the top destination. At the same time, the Asia-Middle East corridor is deepening, with HSBC expecting more than $270bn in cumulative FDI flows between the two regions over the next decade. The prediction for 2026 is that the Middle East will sit at the junction of US and Asian capital and technology, exporting AI-ready infrastructure, green energy molecules and logistics capacity as much as it imports foreign equity.
“The investable story is shifting from one-off giga announcements and oil-linked macro bets to long-term operating platforms, brownfield portfolios and co-investments with sovereign funds that quietly determine the price of capital and compute across the US-GCC-Asia triangle. Investors face a core of system-making economies, and a periphery where FDI is more opportunistic and bespoke.”
North America: USMCA review, World Cup and the mid-terms, and operationalisation of industrial policy
Mary Martens, FDI and lead generation manager for North America, OCO Global
“2025 ended on a cautious note for North American FDI, shaped less by economic fundamentals and more by political ambiguity and policy crosswinds. While multinationals maintained a presence in the US, they favoured M&A-driven entry over new greenfield projects, reflecting uncertainty around trade and regulatory signals.
“Looking ahead, three inflection points will define 2026: the July United States-Mexico-Canada Agreement (USMCA) review stands as the year’s most consequential trade milestone, with potential to either ease investors into unlocking capital or stalling any further nearshoring strategies; 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, as investors shift from chasing incentives to scrutinising execution risks like talent, grid capacity and permitting clarity.
“Against this backdrop, sectors tied to long-horizon strategies (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. If headwinds diminish and ambiguity clears (along with incentivisation materialising), the market could move from defensive positioning to strategic expansion.”
Sean Witry, senior project manager, Transatlantic Business & Investment Council
“US-based production increasingly appears not just an opportunity but a strategic necessity for European companies seeking market stability, supply-chain resilience and access to cutting-edge technologies.
“Recent sentiment among European executives underscores this trend. A new survey from the European Round Table for Industry reports that a growing number of European CEOs are downbeat about Europe’s economic prospects and increasingly favour expanding in the US instead. Concerns about regulatory fragmentation, high energy costs and slow progress on European industrial policy are prompting companies to shift more of their investment pipelines toward the US market. Furthermore, the US has seen the largest currency depreciation since the dollar went off the gold standard. A weaker US dollar lowers the cost of transatlantic expansion.
“A word of caution, however. The rapid speed of this depreciation has further fuelled fear regarding the stability of the US economy in response to policy uncertainty and mounting national debt. Europe’s evolving security outlook and signs of political divergence with Washington are adding complexity to investment planning, encouraging companies to focus on projects aligned with long-term strategic positioning. As a result, European FDI into the US in 2026 is likely to rise – but in a more targeted, strategic manner, with companies prioritising sectors where US policy support, market scale and technological ecosystems outweigh the geopolitical and regulatory risks on both sides of the Atlantic.”
LATAM: regional companies drove 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
“In 2024, FDI inflows in Latin America totalled $189bn, representing a 7.1% increase compared to 2023. Announcements of new projects by multinationals also reached a historic high of $168bn, up 40% from the previous year, driven mainly by megaprojects in oil and gas, renewable energy initiatives and communications, along with several data centre projects.
“Despite signs of recovery following pandemic-induced contraction, current FDI levels remain below the peaks observed between 2010 and 2014, and its current share of gross domestic product (2.8%) is still lower than in that decade (3.3%). The 2024 bump was mostly fuelled by reinvested earnings from companies already operating in the region, rather than equity flows from external sources.
“We also identified a decline in project announcements in high-tech sectors, raising concerns about the region’s ability to attract more knowledge-intensive investments. These structural challenges occur in the context of heightened global uncertainty, largely due to geopolitical tensions and volatile trade policies. For now, preliminary data for 2025 indicates that FDI inflows in most countries in the region have held at 2024 levels or even increased.
“However, forward-looking indicators tell a different story. FDI project announcements – a lead indicator of medium-term investment – suggest that the uncertainty generated by changes in US trade policy is already weighing on future expansion plans in the region. In the first half of 2025, project announcements amounted to $31.37bn, reflecting a 53% year-on-year decline and a 37% drop compared to the 2015–24 average. This has particularly been the case for sectors with strong export links to the US, such as auto and rubber. The main exception was electronic components, with announcements totalling $1.3bn – an increase of 121% year-on-year.”
These comments have been edited for clarity and length
