OECD: Global Cross-Border Investment Weakens, U.S. FDI Outflows Turn Negative

Global foreign direct investment (FDI) weakened in the first half of 2025, according to new data from the Organization for Economic Cooperation and Development (OECD).
The report showed total global FDI flows reached US$663 billion, down 6% year over year, reflecting sharp quarterly volatility.

In the first quarter, worldwide FDI increased 18%, but dropped 38% in the second quarter. Within the OECD area, inbound FDI fell 4% in the first half—rising 56% in Q1, then falling 33% in Q2—driven by equity disinvestments in Ireland and lower reinvestment of earnings.

Meanwhile, outbound FDI from OECD countries plunged 19%, largely because of a sharp contraction in U.S. activity, particularly in the second quarter.
U.S. FDI outflows turned negative, as American affiliates extended loans to their foreign parents and reinvested profits hit a multi-year low. This trend reflects significant profit repatriation from U.S. firms’ European subsidiaries.

Equity capital FDI also declined notably in the first half.
The United States remained the largest recipient of equity FDI inflows, attracting US$46 billion, followed by Canada (US$22 billion) and the United Kingdom (US$18 billion).

Despite stronger-than-expected global growth, the OECD said mergers and acquisitions (M&A) activity has slowed significantly.
By contrast, greenfield capital spending in advanced economies has surged, led by manufacturing and AI-related infrastructure projects.

In the third quarter, the slowdown in cross-border M&A persisted, with the volume and value of dealmaking falling 10% and 6%, respectively.

Looking ahead, the OECD warned that the outlook remains highly uncertain, as rising trade barriers, renewed inflationary pressures, fiscal vulnerabilities, and financial market repricing could weigh on global stability and investment flows.