UN Report Shows Sri Lanka Rebounding in Global Investment Race

COLOMBO (News 1st); Sri Lanka attracted more than US$1 billion in foreign direct investment (FDI) in 2025, marking a significant increase from the previous year and highlighting renewed investor confidence despite a challenging global investment environment, according to the latest World Investment Report 2026 released by the United Nations Conference on Trade and Development (UNCTAD).The report shows that Sri Lanka's FDI inflows increased to US$1.044 billion in 2025, up from US$759 million recorded in 2024. The latest figure represents the country's highest annual FDI inflow since 2022 and reflects growing foreign investment activity at a time when international investors are becoming increasingly selective amid geopolitical tensions, trade uncertainties and shifting global supply chains.According to UNCTAD, global FDI rose by 6 per cent in 2025 to reach US$1.6 trillion. However, much of that growth was concentrated in a limited number of countries and strategic sectors such as artificial intelligence, digital infrastructure, semiconductors, clean energy and critical minerals.The report notes that Sri Lanka's inward FDI stock also continued to expand, rising to US$18.23 billion in 2025 from US$16.6 billion in 2024, indicating a steady increase in long-term foreign investment assets held within the country. Meanwhile, Sri Lanka's outward FDI stock reached US$1.8 billion in 2025, reflecting growing overseas investment activity by Sri Lankan entities.UNCTAD observed global investment expansion was driven largely by a small number of megaprojects, particularly infrastructure related to artificial intelligence. Across most sectors, new project activity is subdued, reflecting heightened investor uncertainty amid geopolitical tensions, trade policy volatility, the rising cost of capital and intensifying technological competition.At the same time, global investment is being reshaped by fault lines in international cooperation and rising economic security concerns. In response, governments are focusing on a narrow set of strategic sectors, while firms are redesigning supply chains along regional and geopolitical lines.The opportunities — and risks — are many. Developing economies may break into new highgrowth industries, including clean energy and advanced manufacturing, but investment could become concentrated, leaving many behind.The report added that the tightening of fiscal incentives represented about half of the restrictive measures adopted by developing economies in 2025. In Sri Lanka, tax holidays for projects in Colombo Port City were shortened and linked to investment scale and employment criteria, it added.