The 2016 foreign direct investment confidence index (FDICI) produced by strategy and consulting firm AT Kearney predicts a rebound in FDI, with 70% of companies planning to increase FDI in the next three years. Developed markets in North America and Europe are to see the greatest increases in FDI, as investor confidence in emerging markets wanes with continued economic volatility, with the US at the top of the index and Europe accounting for 13 of the top 25 countries for inward FDI. That being said, executives see potential risk in both the US and European markets in the lead up to the US election and the UK's EU referendum.

Despite the overall trend of slowing globalisation, executives appear keen to spur growth opportunities through FDI. “Global FDI flows jumped 36% to an estimated $1700bn in 2015 –the highest level since 2007,” the report said, citing rising protectionist sentiment in many economies as a reason for this, as it presents “a need for a local presence to do business in those markets”.

Leading the confidence index are the US and China for the fourth consecutive year. Global executives appear more bullish on the US economic outlook than any other, and while China comes at second place, the index confirms decreased confidence in the Chinese economy and a risk of reduced FDI from multinationals if market uncertainty continues. The country continues to offer substantial cross-sector investment opportunities, however, especially with the Chinese government’s recent decision to partially privatise key industries, including telecommunications, military equipment, oil and gas, and civil aviation.   

Eight out of the top 10 countries in the FDICI are developed markets, with China and India the only exceptions, ranking second and ninth, respectively. Following the US and China in the ranking are Canada – which climbed to third place this year following reforms to its investment laws – Germany, the UK and Japan. Australia, France, India and Singapore follow, with the latter rising five places up the ranking since last year’s FDICI, the largest gain of any country in the index.

Now in its 18th year, the FDICI is produced using primary data from a survey of senior executives and business leaders of companies with more than $500m yearly revenue across 27 countries and spanning all sectors.