A profound re-globalization process is developing, with the global market becoming more digital and sustainable. As we approach 2024, five key forces are set to influence the Foreign Direct Investment (FDI) cycle, according to Jacopo Dettoni, Editor of fDI Intelligence.
Next year marks a historic election year, expecting a record two billion voters across 70 countries. Some outcomes are predictable; India and Mexico anticipate the necessary parties to maintain power, while the UK predicts opposition victory.
Uncertainty looms, especially in the US, where a potential Biden/Trump faceoff remains likely. With the decline of the free market mantra, politics, both domestic and foreign, increasingly determine investment policies. Concurrently, armed conflicts in Ukraine and Gaza further shape global FDI dynamics.
Beyond elections, Chinese investors are resurgent post-COVID-19. The pandemic’s impact lingers, but China, having lifted restrictions recently, shows a surge in outward investments. Chinese companies, breaking previous records, direct over 90% of capital to developing countries, notably in North Africa and Southeast Asia, reinvigorating the Belt and Road Initiative.
Tourism, devastated by the pandemic, sees a revival, particularly with Chinese tourists. The Indo-Pacific region anticipates robust tourism growth in 2024, drawing renewed investor interest after the sector’s pre-pandemic contribution to global greenfield FDI.
The extraction cycle gains momentum amid documented critical mineral supply-demand imbalances. Mining companies, conservative in capex, must accelerate to meet energy transition needs. Oil and gas developments, often privatized, complicate the landscape. Yet, developing countries remain committed to untapped hydrocarbon reserves, while European nations seek alternatives to Russian resources.
Finally, Artificial Intelligence (AI) unleashes transformative effects in 2024. Steady AI application deployment disrupts FDI-heavy sectors. The call center industry faces potential obsolescence, impacting developing countries’ employment landscapes. Simultaneously, AI companies expand globally, creating new jobs and uncertainties in this transformative landscape.
Related Article by Jacopo Dettoni.
More on News and Updates