FDI into developing economies slumps to lowest level since 2005: World Bank
RIYADH: Foreign direct investment flows into developing economies dropped to $435 billion in 2023, the lowest level since 2005, as rising trade barriers, geopolitical tensions and growing fragmentation curbed cross-border investment.
In its Global Economic Prospects report, the World Bank said FDI into advanced economies also dropped, sinking to $336 billion — the weakest level since 1996.
While data for the 2023 calendar year is the latest available from the World Bank, net FDI into Saudi Arabia — one of the world's top emerging markets — reached SR22.1 billion ($5.89 billion) in the fourth quarter of 2024, representing a 26 percent increase compared to the previous three months, according to the Kingdom's General Authority for Statistics.
Saudi Arabia is aiming to attract $100 billion in FDI annually by the end of this decade, as it seeks to make significant strides in diversifying its economy and reducing its decades-long dependence on oil revenues.
Commenting on the findings, Indermit Gill, chief economist and senior vice president of the World Bank Group, said: 'What we're seeing is a result of public policy. It's not a coincidence that FDI is plumbing new lows at the same time that public debt is reaching record highs.'
He added: 'Private investment will now have to power economic growth, and FDI happens to be one of the most productive forms of private investment. Yet, in recent years, governments have been busy erecting barriers to investment and trade when they should be deliberately taking them down. They will have to ditch that bad habit.'
FDI inflows to developing countries in 2023 accounted for just 2.3 percent of their combined gross domestic product — about half the share recorded in the 2008 peak.
The report noted that inflows had expanded rapidly in the 2000s, peaking at nearly 5 percent of GDP in 2008, but have since steadily declined.
Between 2012 and 2023, two-thirds of FDI into developing countries was concentrated in just 10 markets. China captured nearly a third of the total, while Brazil and India accounted for about 10 percent and 6 percent, respectively.
Advanced economies accounted for nearly 90 percent of total FDI in developing economies over the past decade, with about half of that originating from the EU and the US, the World Bank noted.
Earlier this month, global credit rating agency S&P Global said FDI inflows into Gulf Cooperation Council countries are expected to slow in 2025 due to rising investor uncertainty. The outlook reflects shifting US trade policies, lower oil prices, and a more gradual rollout of economic diversification projects in the region.
S&P Global also forecast a net negative impact on global FDI in the near term, driven by the indirect effects of US tariffs, a weaker oil price outlook, and declining global investor confidence.
Combating challenges and easing restrictions
The World Bank urged developing nations to ease investment restrictions that have accumulated in recent years, promote trade integration, and broaden participation in their economies.
Ayhan Kose, the World Bank Group's deputy chief economist and director of the Prospects Group, said the sharp drop in FDI for developing countries 'should sound alarm bells.'
He added: 'Reversing this slowdown is not just an economic imperative — it's essential for job creation, sustained growth, and achieving broader development goals. It will require bold domestic reforms to improve the business climate and decisive global cooperation to revive cross-border investment.'
The report also outlined policy priorities for developing economies to increase FDI, including accelerating improvements in the investment climate — progress that has stalled in many countries over the past decade.
Saudi Arabia is among the countries making notable strides to attract FDI by introducing regulatory reforms aimed at easing restrictions.
In August, the Kingdom approved an updated investment law designed to boost transparency and simplify the investment process, as part of broader efforts to facilitate and expand FDI.
The updated rule also promises enhanced protections for investors, including adherence to the rule of law, fair treatment, and property rights, alongside robust safeguards for intellectual property and seamless fund transfers.
In April, Saudi Arabia rose to 13th place in Kearney's 2025 Foreign Direct Investment Confidence Index, up from 14th in the previous year's ranking.
The Kingdom also retained its position as the third-most attractive emerging market, signaling continued global confidence in its transformation strategy.
Kearney noted that the ranking reflects Saudi Arabia's bold, reform-driven approach to building an internationally competitive, future-ready economy.
The World Bank emphasized that countries should amplify the economic impacts of foreign investment by promoting trade integration, improving institutional quality, fostering human capital development, and encouraging broader participation in the formal economy to maximize FDI benefits.
'Governments can also amplify the benefits by channeling FDI to sectors where the impact is greatest. FDI can also help increase job opportunities for women: the domestic affiliates of multinational enterprises, for example, tend to have a higher share of female employees than domestic firms,' the report stated.
Saudi Arabia is also among the global frontrunners in efforts to bridge the gender gap in the workforce.
Speaking during the Future Investment Initiative in Riyadh in October, Saudi Arabia's Minister of Finance, Mohammed Al-Jadaan, said the nation aims to achieve 40 percent female workforce participation by the end of the decade, having already surpassed its Vision 2030 target of 30 percent.
He added that 45 percent of small and medium enterprises in the Kingdom are headed by women.
Underscoring the importance of global cooperation, the World Bank urged all countries to work together to accelerate policy initiatives that can help direct FDI flows to developing economies with the largest investment gaps.
'Technical and financial assistance to support structural reform efforts in developing countries — especially low-income countries — are critical for facilitating FDI inflows,' the bank concluded.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arab News
9 hours ago
- Arab News
Shifting tourism from preservation to regeneration
Since COVID-19 restrictions were lifted, tourism has rebounded rapidly. According to the World Travel and Tourism Council, it is expected to hit record levels in 2025. But this growth demands an urgent reassessment of how tourism impacts the natural world. This is especially critical in coastal regions, which attract nearly half of all international travelers and are home to some of the planet's most vulnerable ecosystems, including coral reefs, mangroves, and seagrass beds. A new model is emerging: regenerative tourism. Rather than focusing solely on preservation, it aims to restore and enhance these ecosystems. Rooted in science, innovation and careful planning, regenerative tourism offers a new relationship between people and place — one that strengthens biodiversity, supports communities, and creates lasting value. At Red Sea Global, this approach is applied across every stage of development, using data, design and ecological insight to show how tourism can contribute to long-term environmental recovery. Regeneration begins not with restoration, but with rethinking how we design and build from the start. The Red Sea and AMAALA, two of our flagship destinations, are developed with this question in mind: How can we leave a place healthier than we found it? In Al-Wajh Lagoon, for example, development is limited to just 22 of more than 90 islands, with nine designated as conservation areas. At AMAALA, development is capped to accommodate no more than 500,000 guests per year to protect delicate habitats from overuse. At Shebara, overwater villas were built directly above the sea, avoiding sensitive beach zones and using marine-safe materials. The Desert Rock resort was carefully integrated into the landscape, preserving the natural contours of the mountains while minimizing disruption to the surrounding environment. And at AMAALA's organic farms, sustainable food production operates entirely off-grid, powered by solar energy and integrated into the local ecosystem. Together, these projects reflect our broader goal of delivering a 30 percent net conservation benefit across The Red Sea and AMAALA by 2040. Our environmental restoration programs go beyond conservation — they aim to rebuild ecosystems at scale and boost their long-term resilience. We have launched an extensive seagrass restoration initiative, recognizing the critical role these underwater meadows play in nurturing marine biodiversity, from dugongs to sea turtles. Seagrasses also improve water quality and act as efficient carbon sinks. At the same time, our coral gardening program has transplanted more than 100,000 corals across the Red Sea, achieving survival rates that exceed global benchmarks. These efforts help reestablish reef habitats that support a wide range of marine life. Perhaps most ambitious is our mangrove regeneration program. Supported by a nursery of 1 million sq. meters, we have planted more than 3 million mangrove trees across our destinations. These trees stabilize coastlines, support fisheries, filter pollutants and store significantly more carbon than tropical rainforests. Rooted in science, innovation and careful planning, regenerative tourism offers a new relationship between people and place. Rashid Alhatilah To ensure long-term impact, we have partnered with the National Center for Vegetation Cover and other stakeholders to protect and expand these efforts. At Red Sea Global, technology is a core part of the infrastructure for regeneration. From real-time marine sensors to nature-based solutions, innovation helps us make smarter, faster decisions and expand our impact across sectors. Our marine environments are monitored using AI-powered sensors that track water quality, biodiversity and environmental changes in real time. This enables rapid response, reduces reliance on human divers and improves data accuracy. We also invest in technologies that mimic or enhance natural systems — often called nature-based solutions. These span construction, clean energy, agriculture and water treatment, offering practical ways to cut costs, boost efficiency and restore ecosystems. This approach redefines how we value the natural world. Ecosystems are no longer seen as passive scenery or extractable assets, but as active participants in a regenerative economy. The Corallium Marine Life Institute lies at the heart of our regenerative approach. As both a research center and visitor experience hub, Corallium enables marine species to reproduce in controlled environments that replicate the Red Sea's natural conditions. These 'living laboratories' allow us to test and refine ecological interventions before applying them in the wild. Collaboration is key to our progress. We work closely with the King Abdullah University of Science and Technology, the Coral Research and Development Accelerator Platform, and innovation platforms such as WAVE — an initiative launched by Princess Reema bint Bandar — to support ocean-positive solutions. These partnerships bring together researchers, entrepreneurs, policymakers and conservationists to align innovation with environmental impact. Looking ahead, global platforms such as The Ocean Race 2027, which will celebrate its Grand Finale at AMAALA, will bring international attention to the urgent need to protect ocean health. Through sport, science and storytelling, such events help catalyze public engagement and drive meaningful change. At Red Sea Global, we are building destinations where guests play an active role in regeneration. Through education, immersive experiences and hands-on restoration efforts, tourism becomes a practical tool for protecting natural systems. There is growing recognition that environmental health and economic resilience are deeply connected. Regenerative tourism offers a realistic way to align development with long-term ecological and social value. The path forward depends on collective commitment, thoughtful design and a willingness to rethink how development, nature and people coexist. The opportunity is clear: to make regeneration the baseline — setting a new standard for tourism to build smarter, travel better, and help restore what has been lost. • Rashid Alhatilah is the group head of environment at Red Sea Global
Arab News
11 hours ago
- Arab News
Roll the dice: Monopoly Riyadh set to hit shelves this September
RIYADH: The launch of a Riyadh edition of the iconic Monopoly board game was announced on Thursday at a preview event that even feature an appearance by the game's mascot, Mr. Monopoly. The new version of the game, which will be on sale in September, was created, according to a statement, to celebrate 'the rich heritage and modern transformation' of the Kingdom's capital and features locations including the King Abdullah Financial District, Saudia Airlines, Souk Al-Zal, the Saudi Cup, the Diplomatic Quarter, Tamimi Markets, Jazean coffeeshop, Bujairi Terrace in Diriyah, Olaya Street, and King Fahd Road. 'We strive to include both the traditional and the modern in terms of landmarks and to create a story. So as you're going through the Monopoly board, you are learning about, and getting insight into, the city of Riyadh, and you're passing roads that most real residents would pass by on a day-to-day or weekly basis,' Hamad Alowaishiq, founder and chairman of official partner the Saudi Youth Society (SYS), which acted as a cultural advisor for the game's makers, told Arab News. 'It's a responsibility and a pleasure to be representing Riyadh on such a platform. And with that responsibility, we have been dedicated to delivering the identity and culture of Riyadh,' he added. According to Guinness World Records, Monopoly is the best-selling board game in history, with more than 275 million units sold worldwide over the past 90 years. 'There's something really interesting about seeing our city culturally represented within an international brand,' Princess Nourah Al-Faisal, vice-chairman of SYS, told Arab News. 'It says a lot about how far we've come and how important our market and our community has become on the international scale that Monopoly would come and do this—and quite right too.' 'I remember playing this game when I was young with my grandfather and family,' Liam Johnson, the racecourse director of the Jockey Club of Saudi Arabia's Saudi Cup, told Arab News, adding that he believed the Saudi Cup's profile would be raised globally by being featured in an edition of a game that 'cuts through the different audiences.' Diriyah has three places on the board: Wadi Hanifah, Zallal, and Al-Bujairi Terrace — all of which have become staples in Riyadh's events and hospitality sectors. 'As the birthplace of the Kingdom and its significance to the country, to be able to bring that legacy and that heritage onto the board is a true honor,' Nicola Cope, executive director of brand marketing at Diriyah, told Arab News. The Ritz-Carlton's Mazen Allam said: 'Over the years, we've been privileged to host moments that actually matter, from royal visits, world summits, weddings, quiet weekends, all woven under the fabric of this city. Now, with Monopoly, we get to join families and communities across generations. And the fact that we can create joyful memories that extend beyond our walls is something very special.' KAFD, home to 95 interconnected buildings, where more than 20,000 people work — not including the thousands of daily visitors and residents, is a pivotal inclusion on the board. Mazroua Al-Mazroua, KAFD's chief marketing and experience officer, told Arab News: 'We all grew up playing Monopoly. We understand the game — it's strategic, competitive, and centered around real estate. Today, KAFD reflects those same qualities. It's not just an iconic business district; it's Saudi Arabia's first vertical urban city and a dynamic lifestyle destination. 'It only makes sense for KAFD to be featured in the Monopoly Riyadh Edition — a perfect match between a game of strategy and a district that lives and breathes it every day.'
Arab News
11 hours ago
- Arab News
War-torn nations face growing poverty and hunger crisis
WASHINGTON: The world's most desperate countries are falling further and further behind, their plight worsened by conflicts that are growing deadlier and more frequent. That is the sobering conclusion of the World Bank's first comprehensive study of how 39 countries contending with 'fragile and conflict-affected situations'' have fared since the COVID-19 pandemic struck in 2020. 'Economic stagnation — rather than growth — has been the norm in economies hit by conflict and instability,' said Ayhan Kose, the World Bank's deputy chief economist. Since 2020, the 39 countries, which range from the Marshall Islands in the Pacific to Mozambique in sub-Saharan Africa, have seen their economic output per person fall by an average 1.8 percent a year. In other developing countries, by contrast, it grew by an average of 2.9 percent a year over the same period. The World Bank finds that countries involved in high-intensity conflict — which result in more than 150 deaths per million people — experience a cumulative drop of 20% in their gross domestic product, or the output of goods and services, after five years. More than 420 million people in the fragile economies are living on less than $3 a day — the bank's definition of extreme poverty. That is more than the combined total of everywhere else, even though the 39 countries account for less than 15 percent of the world's population. Many of these countries have long-standing problems with crumbling infrastructure, weak governance, and low educational standards. People in the 39 countries get an average of just six years of schooling, three years fewer than those in other low- and middle-income countries. Life expectancy is five years shorter, and infant mortality is twice as high. Increasing conflicts have made things worse. In the 2000s, the world saw an annual average of just over 6,000 conflicts — in which organized groups used armed force against other groups or civilians and caused at least one death. Now the yearly average exceeds 20,000. The conflicts are more lethal, too: In the 2000s, they took an average of fewer than 42,000 lives a year. From 2000 through 2024, the number averaged almost 194,000. Of the 39 countries, 21 are involved in active conflicts, including Ukraine, Sudan, Ethiopia, and Gaza. The World Bank finds that countries involved in high-intensity conflict — which result in more than 150 deaths per million people — experience a cumulative drop of 20 percent in their gross domestic product, or the output of goods and services, after five years. More conflict also means more hunger: The World Bank estimated that 18 percent — around 200 million — of the people in the 39 countries are 'experiencing acute food insecurity'' compared with just 1 percent in other low and middle-income countries. Some countries have managed to escape the cycle of conflict and economic fragility. Kose cites Nepal; Bosnia and Herzegovina; Rwanda; and Sri Lanka as relative success stories. And the World Bank report notes that the 39 countries do enjoy strengths, including natural resources such as oil and natural gas, and a lot of young, working-age people at a time when many economies are aging. 'Some of them are very rich when it comes to their tourism potential,'' Kose said. 'But you need to have security established. You and I are not going to go and visit these places unless they are safe, even though they might be the most beautiful places in the world.''
