The UAE led the GCC region in FDI inflows in 2022, attracting $22.73 billion, representing a 10% y/y increase. 

 

The UAE has also led the GCC region in FDI outflows in 2022, deploying $24.83 billion in investments abroad, a 10% increase y/y, according to Mayed Alrashdi, Economist, Emirates NBD Research. 

 

Saudi Arabia came in second with $18.82 billion, reflecting a notable 21% decline y/y. Qatar came in third with $2.38 billion, experiencing a surge of 1391% y/y from a mere $160 million in 2021. 

 

Bahrain came in fourth with $1.95 billion, a significant jump of 2926% y/y from $64 million in 2021. Oman came in fifth with a negative FDI outflow of $520 million, signifying a 31% decline y/y. Kuwait came in sixth with a negative FDI outflow of $25.6 billion, a 649% decline y/y. A negative FDI outflow is typically attributed to factors such as asset sales, borrowing activities, or extraction of dividends.

 

Meanwhile, Dubai accounted for approximately half of the total FDI inflows, attracting $12.8 billion. 

 

The top five sectors for FDI inflows in Dubai in 2022 were Transportation and Warehousing with a 45% share, Hotels and Tourism and Alternative/Renewable energy with a 9% share each, Software and IT services accounting for 8%, and Consumer Products with 5%.

 

The UAE announced recently that it’s forming a Ministry of Investment to boost the country’s diversification efforts and achieve its ambitious goals of both attracting $150 billion in FDI inflows by 2031 and ranking among the top 10 countries in terms of FDI inflows. 

 

The UAE currently sits in the 16th place globally in FDI inflows, a big jump from 22nd place in 2021. In terms of greenfield FDI projects, the UAE came in fourth after the US, the UK and India, with 997 projects, a surge of 84% y/y. Notably, the UAE is the only GCC nation that experienced a constant growth in FDI inflows over the past five years.

 

FDI inflows to Saudi Arabia drop 35pc

Saudi Arabia came in second place amongst its GCC neighbours in total FDI inflows with $7.89 billion in 2022, a decline of 35% y/y. 

 

Saudi Arabia’s decline in FDI inflows comes after a record figure of $19.29 billion in 2021, the highest in the kingdom’s history, which can be attributed to the privatisation law passed to facilitate public private partnerships and ease of regulations for foreign investors. 

 

The privatisation law has enabled Aramco to sell a 49% stake in its pipelines for $12.4 billion to a consortium led by the US-based EIG Global Energy Partners. The Aramco deal accounted for 65% of the total FDI inflows in 2021.  

 

Oman followed in third place with $3.72 billion, down 8% y/y. Bahrain came in fourth with $1.95 billion, marking a 10% increase y/y. Kuwait came in fifth with $756 million, which indicates a considerable 34% jump y/y, yet remains 74% lower than the levels recorded in 2012. Qatar saw the smallest inflows within the bloc, with $76 million, amounting to a 107% decline y/y.

 

GCC region has net positive FDI

The GCC region achieved a net positive FDI of $15.25 billion in 2022, after a substantial surge of 369% y/y. However, this net positive in FDI for the region is mainly attributed to the substantial decrease in FDI outflows by Kuwait, rather than an increase in FDI inflows. 

 

In fact, the total FDI inflows in the region experienced a 18% y/y decline, dropping from $45 billion to $37 billion. The region’s decline in FDI inflows parallels the global decline in FDI which were down by 12% in 2022 according to Unctad’s annual World Investment Report 2023.-- TradeArabia News Service