Global flows of foreign direct investment (FDI) came in weaker in the first half of 2025, according to data from the Organization for Economic Cooperation and Development (OECD).
In a new report, the Paris-based group said that for the first half, global FDI flows came in at US$663 billion, down by 6% from the same period a year ago, amid dramatic quarterly shifts.
In the first quarter, flows were up by 18%, but they subsequently dropped by 38% in the second quarter, the OECD reported.
Overall, FDI inflows into the OECD area fell by 4% in the first half, as inflows rose by 56% in the first quarter, but dropped by 33% in Q2, “partly reflecting decreases in Ireland due to equity disinvestments and reduced reinvestment of earnings.”
At the same time, FDI outflows from the OECD area fell by 19% in the first half, “driven by a sharp decline in the United States, particularly in Q2,” the OECD said.
U.S. FDI outflows turned negative in the quarter, it noted, as “U.S. affiliates extended loans to their foreign parents and reinvestment of earnings dropped to a multi-year low, reflecting substantial repatriations by U.S. parents from their European affiliates.”
In particular, equity capital FDI flows declined in the first half, the OECD noted.
The U.S. remained the largest recipient of equity FDI flows at US$46 billion, followed by Canada (US$22 billion) and the U.K. (US$18 billion), it reported.
“Despite stronger-than-expected global growth, M&A activity slowed down, whereas announced greenfield capital expenditures reached a peak in advanced economies, particularly in manufacturing and infrastructure projects related to AI,” the report said.
The slowdown in cross-border M&A continued in the third quarter, the OECD noted, as the volume and value of dealmaking activity declined by 10% and 6%, respectively.
For the rest of the year, the outlook remains uncertain, the report said, “as rising trade barriers, resurging inflationary pressures, heightened fiscal risks, and financial market repricing could weigh on stability and economic activity.”