UAE ranks 18th globally in the FDI confidence index

The UAE has secured the top spot in the region and third position globally in the exclusive ranking, owing to its remarkable growth in the previous year, favorable business environment, and focus on innovation and technological advancements. This index, for the first time in its 25-year history, aims to provide business leaders with further wisdom into the emerging markets that are most attractive to investors.

In 2022, the UAE experienced an incredible 7.9 percent growth in GDP, while many other countries faced weak growth following a post-Covid economic boom in 2021. The country is projected to maintain a steady growth trajectory in 2023 and 2024, with growth rates of 3.2 percent and 4.8 percent, respectively.

“The UAE continues to be an extremely appealing destination for investors, especially with the introduction of the Dubai Economic Agenda (D33), an economic plan worth $8.7tn, aimed at increasing trade, investment, and establishing its status as a global hub. The government’s unwavering dedication to diversifying the country’s economy and improving its business climate is evident.

Their systematic strategy toward promoting the future willingness of the economy and the nation is remarkable. As the world undergoes the energy transition at different paces and in various forms, the ongoing transformation will continue to benefit from hydrocarbon demand, which will aid in funding these efforts.”

commented Rudolph Lohmeyer, partner, National Transformations Institute, Kearney Middle East.

FDI CI MENA rankings
The Middle East’s presence on the index was strengthened by the UAE ranking 18th globally, along with Qatar (21st) and Saudi Arabia (24th).

The strong performance of Saudi Arabia was driven by high GDP growth (8.7 percent in 2022), pro-business reforms, a positive fiscal outlook, and progress in economic diversification.

Qatar’s rise in the global ranking by three places from 2022 can be attributed to the country’s prestigious hosting of the FIFA World Cup, along with the National Vision 2030 aimed at diversifying and developing the economy. The increasing investor confidence can also be attributed to Qatar’s GDP growth of 4.1 percent in 2022, up from 1.5 percent in 2021.

Qatar and Saudi Arabia also ranked fourth and sixth, respectively, in the emerging markets ranking.

Investor sentiment is also growing in other Middle East countries, with Egypt, Turkey, and Morocco ranked 14th, 15th, and 16th, respectively, in the emerging markets ranking.

FDI CI global rankings
According to the report by a global strategy and management consulting firm, investors exhibit a careful yet hopeful outlook toward the global economy. The report reveals that more than three-quarters (82 percent) of investors intend to raise their FDI over the next three years. Additionally, 86 percent of the investors believe that FDI is critical for their corporate profitability and competitiveness in the upcoming three years. Nonetheless, this positive sentiment is counterbalanced by apprehension about the potential for downside risks.

The United States has secured the top spot for the 11th year in a row, while Canada has regained its second position after dropping to third place in 2022. Japan has moved up to third place from fourth last year. Germany has slipped two positions to fourth place, potentially due to the economic and energy challenges it has encountered due to the geopolitical crisis in Eastern Europe.

The UK maintains its fifth spot, followed closely by France. China has climbed from 10th to 7th position, potentially due to Beijing’s decision to abandon its zero-Covid policy in the fourth quarter of 2022.

The survey indicates that investors still prefer developed markets, as they accounted for 19 of the 25 countries on the index this year.

According to the 2023 report, business leaders are convinced that globalization is and will continue to be the key driver in foreign direct investment. A significant majority of respondents (66 percent) predict that globalization will grow over the next three years, while only 23 percent anticipate a decline.

The expected expansion of globalization is attributed to the combination of a well-connected digital infrastructure, growing trade prospects, and reduced trade barriers. However, investors acknowledge that globalization is evolving.

The co-author of the report, Terry Toland, who is also a manager at the Global Business Policy Council, stated that although investors recognize the advantages of globalization and anticipate its strengthening, they also foresee a rise in regionalization in the next three years, with national governments implementing measures to promote self-reliance. These results imply an understanding that while globalization will persist, its character may be evolving, and business leaders will need to adapt accordingly.

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