The IMF has warned that rising geopolitical tensions have led to the reshaping of global foreign direct investment (FDI), which presents a risk to financial stability and global economic growth.

In several reports published on April 5, the IMF found that FDI flows were increasingly being directed to geopolitically aligned countries rather than those that are geographically close — a phenomenon often referred to as ‘friendshoring’. 

The analysis, which used fDi Markets data, noted that emerging markets and developing countries were more vulnerable to these changing FDI decisions since they tend to be more reliant on flows from more geopolitically distant countries. Friendshoring is likely to continue in the coming years, given that 73% of executives surveyed by management consultancy Kearney believe it will increase by 2026.

The IMF also noted that the flow of “strategic FDI” to Asian countries, in sectors such as semiconductors, started to decline in 2019 and has only recovered mildly in recent quarters. Flows to China have not yet recovered, according to fDi Markets data cited by the IMF.

The IMF estimates that the fragmentation of investment flows, both FDI and non-FDI, could lead to a loss of almost 2% in global gross domestic product.

“The estimated large and widespread long-term output losses show why it’s crucial to foster global integration — especially as major economies endorse inward-looking policies,” said the IMF.

EBRD’s backs 900MW of solar in Uzbekistan

The European Bank of Reconstruction and Development (EBRD) has organised $205m in financial support for plans by Abu Dhabi’s Masdar to develop nearly 900 megawatts (MW) of solar power plants in Uzbekistan.

The multilateral development bank announced on April 5 that the funds would be used by Masdar to construct and put into operation three greenfield projects. The UAE-based renewables developer has become an increasingly active global investor, including with projects in Azerbaijan, Zambia and across the Middle East and Africa.

The projects include a 457MW solar photovoltaic plant in the Surkhandarya region and another 220MW solar farm in the Jizzakh region. The final 220MW plant will be located in the Samarkand region, where the EBRD will host its annual meeting from 16–18 May 2023. Once operational, the projects are expected to generate up to 2200 gigawatt-hours of electricity, which is enough to power more than one million homes in Uzbekistan.

Vantage Data Centers’ $2.7bn EMEA expansion

IT service management company Vantage Data Centers has entered into a definitive agreement with a consortium of investors to accelerate the growth of its hyperscale data centre campuses across Europe, the Middle East and Africa.

In a release on April 4, the US-based company had entered into an investment partnership with Digital Bridge Group, the asset management arm of Munich RE Group and asset manager Infranity. The partnership, which is expected to be finalised in the second quarter of 2023, is valued at about $2.7bn, 

Vantage currently has 26 data centre campuses across five continents. Half of these were opened last year, in countries such as the US, South Africa, Poland and Germany. 

And finally, American multinational food company Mars has committed to invest $2.7bn over the next three years in its sustainability plan. The company said on April 4 that this will include plans to cut greenhouse gas emissions and hundreds of millions of investment to transform their product portfolio and redesign more than 12,000 packaging components.