Kearney’s 2025 Foreign Direct Investment (FDI) Confidence Index has been released, highlighting the mixed outlook for Asia Pacific (APAC) markets amidst new US tariffs. The index, which surveys global business executives, shows Japan and South Korea climbing in rankings due to their technological advancements and economic performance.
Meanwhile, Singapore and India have slipped in the rankings, reflecting investor concerns over regulatory complexity and trade risks.
The report reveals that eight APAC markets feature in the global top 25, with Japan moving up to 4th place and South Korea reaching 14th. This shift is attributed to strong technology sectors and economic fundamentals. Shigeru Sekinada, Region Chair for Asia Pacific at Kearney, noted, “Japan’s leap and South Korea’s record performance demonstrate the power of innovation and strong market fundamentals.”
Despite these gains, the region faces challenges. Rising commodity prices and geopolitical tensions are tempering investor optimism. Approximately 43% of APAC investors foresee an increase in commodity prices, driven by fears of global conflict and supply chain disruptions. Additionally, a more restrictive regulatory environment is anticipated in both developed and emerging markets.
Southeast Asia continues to shine in the Emerging Markets Index, with Thailand, Malaysia, and Indonesia securing top 15 positions. Investors are drawn to the region’s skilled workforce and manufacturing capacity. Sekinada emphasised the importance of strategic investments, stating, “APAC markets retain their core appeal, offering strong fundamentals that investors value deeply.”
As the region navigates these complexities, Kearney’s findings underscore the need for businesses to engage in scenario planning and strategic investments to mitigate risks and capitalise on opportunities.
“`
