The latest Foreign Direct Investment (FDI) Confidence Index by Kearney reveals a striking rise in investor optimism, despite ongoing global economic challenges and geopolitical tensions. The United States maintains its top ranking for the 12th consecutive year, buoyed by robust economic growth and rebounding consumer sentiment.

Fashion industry leaders, however, continue to navigate a tough climate with inflation, higher production and labour costs as well as a changing retail landscape that has seen subdued sales in China.

In Kearney’s report, investor confidence appears resilient in the face of anaemic global growth, which declined from 3.1 percent in 2022 to 2.7 percent in 2023, with forecasts suggesting a further dip to 2.4 percent this year. Despite these headwinds, 88 percent of respondents plan to increase their FDI over the next three years, up 6 percentage points from the previous year.

The survey highlights a notable shift in global rankings. China ascended to third place from seventh, potentially due to the easing of capital controls for foreign investors in key cities. Conversely, Japan slipped from third to seventh, reflecting its recent entry into recession. The United Arab Emirates and Saudi Arabia made significant leaps, rising to 8th and 14th respectively, underscoring the growing appeal of emerging markets.

Investors' outlook on the global economy has markedly improved, with net pessimism decreasing from 35 percent to 29 percent year-on-year. However, geopolitical tensions and increasingly restrictive regulatory environments remain significant concerns, with 85 percent of investors anticipating that geopolitical issues will impact investment decisions.

The survey also sheds light on the rapid proliferation of artificial intelligence (AI) in business operations. A substantial 72 percent of investors report significant or moderate use of AI, with applications ranging from customer service to supply chain enhancement. Looking ahead, 64 percent anticipate expanding their use of AI in investment decision-making over the next three years.

As the global economy navigates uncertain waters, this year's FDI Confidence Index paints a picture of cautious optimism. Investors appear poised to capitalise on emerging opportunities, particularly in AI and emerging markets, while remaining vigilant to geopolitical and regulatory risks.

For more information or to read the report visit Kearney.com.