Foreign direct investment confidence wavers amid global volatility

Foreign direct investment confidence is wavering globally as geopolitical shocks and escalating tariffs create an atmosphere of caution among investors. Developed markets are currently leading the way in the foreign investment game, while emerging economies like South Africa are striving to attract foreign investment amid volatile market conditions. Kearney's 2025 FDI Confidence Index has shed light on investor sentiment, demonstrating a clear preference for perceived safety and stability. Theo Sibiya, Africa Managing Partner at Kearney, provided insights into the impact of global events on investor perceptions and the factors influencing FDI flows. The 13th edition of the Investment Confidence Index reflects the sentiment of investors by evaluating their outlook on future opportunities. Despite significant global uncertainty, developed economies continue to occupy top positions in the rankings due to factors such as GDP growth, regulatory frameworks, ease of capital movement, technological capabilities, talent, and security. Countries like the United States, Canada, the United Kingdom, Germany, and Japan stand out for their strong performance in these areas. Technological dominance remains a key driver of investment, with the U.S. leading the pack followed closely by Canada. Other countries like the U.K., Germany, Japan, China, France, and Italy also excel in this regard. Emerging markets have faced challenges in attracting foreign investment, as capital gravitates towards safe havens amid global volatility. However, countries like South Africa are making strides by focusing on energy security, infrastructure reforms, renewable energies, and other fundamental factors that appeal to investors. The Middle East, particularly the UAE and Saudi Arabia, has seen significant progress in attracting foreign direct investment by liberalizing markets and implementing investor-friendly policies. Countries like Brazil, Thailand, and Malaysia have also showcased improvements in regulatory environments, GDP growth, technology, talent, and infrastructure quality. South Africa's recent rise in the rankings, from 17th in 2023 to 7th in 2025, is attributed to advancements in energy supply, reforms in logistics and transport, renewable energy initiatives, and private sector participation in key sectors. Investors have taken note of these positive developments and are optimistic about South Africa's investment potential. Looking ahead, the future of foreign direct investment remains uncertain amidst geopolitical challenges and market volatility. Despite the shifting global landscape, countries that focus on enhancing economic performance, regulatory frameworks, technological capabilities, and incentives for investment are likely to attract greater investment flows. South Africa, in particular, has made significant progress in recent years and is poised to continue climbing the ranks in foreign direct investment confidence.