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The UAE's Record Foreign Direct Investment Inflows: Key Trends and Rankings

April 24, 2024 ( Newswire) The United Arab Emirates has become a magnet for foreign direct investment, attracting record levels and establishing new worldwide trends in various modern industries. The Gulf nation defied all expectations by drawing an astounding $23 billion in 2022 and going on to grow this sum dramatically in 2023.

Affluent investors are still drawn to the UAE, primarily because of its vibrant business environment, which aligns with present and future market trends. Investors are particularly focused on unicorns like the emerging gaming sector in the Middle East. Angel investors and global gaming operators are customizing the services to the local market, such as the best casinos for Arab players, which are pretty popular among Gulf residents.

2022 and 2023 Growth Spurt

Almost never does a country go against the general direction of the global market. However, the United Arab Emirates recently demonstrated that it is doable. According to the World Investment Report 2023, foreign direct investment fell by 12% globally in 2022 compared to 2021. Surprisingly, the UAE experienced the exact reverse that year.

The 2023 report stated that, unlike most other nations, the UAE's FDI increased by 10% in 2022. The country's investment allure helped attract more than half of the total FDI in the Gulf Cooperation Council region.

More intriguing, the UAE repeated the trend the following year. According to a recent UNCTAD report, the UAE's FDI expanded by 28% in 2023 compared to 2022. The gain meant that the UAE's investment attractiveness remained stable for the second year in a row, defying worldwide trends.

Comparing UAE's FDI Success

In 2022, the UAE's gains placed it among the recognized FDI leaders. Only Israel outperformed the UAE in the Middle East and North Africa (MENA) region that year. According to the UNCTAD's 2023 World Investment Report, Israel ranks 15th internationally in terms of FDI inflows. The UAE followed closely, finishing 16th.

It was a historic victory for the UAE, particularly compared to its oil-rich Gulf neighbors. Saudi Arabia's performance in 2022 was also surprising. Unlike the UAE, Saudi Arabia's FDI inflows fell by over 60%, reaching a low of $7.2 billion. Saudi Arabia has long been at the top of the FDI game, with highs of more than $35 billion in the first decade of this century.

The decline in 2022 surpassed the majority of declines that the nation has encountered over the past fifteen years. It revealed a significant vulnerability in the country's policies, as its neighbor, the UAE, was growing.

The Drivers of UAE's FDI Gains

Several factors contribute to the UAE's position as a leader in FDI inflows to the Gulf region. For starters, the UAE economy is at its peak. The Gulf Cooperation Council (GCC)'s six members have been diversifying their economies to minimize their reliance on hydrocarbons.

However, the UAE is comparatively the best at executing the grand plan. Its recent FDI performance is mainly due to its success in increasing trade, tourism, and financial services. Government policies have also had a significant impact in attracting FDI. The UAE has taken significant steps to reform legislation and refine its international policies in recent years.

These modifications have facilitated adequate liberalization to allow foreign parties to invest in the UAE. Investing in the UAE is surprisingly simple, albeit several license and ownership requirements exist.

Furthermore, the UAE's government has done an excellent job of making the country attractive to investors. Leaders at the Ministry of State for Foreign Commerce have done a remarkable job of keeping its commerce accessible to investors worldwide.

UAE's Rating for Greenfield FDI in 2023

The UAE's increased FDI has had a far-reaching impact on its global image. In 2023, a research titled "Investment Trends Monitor" ranked the UAE second in greenfield foreign direct investment, with the United States leading the list. The report also praised Saudi Arabia's greenfield FDI inflows, which performed admirably in 2023.

The UAE's ranking is based on its economic development and diversification efforts. The country's primary goal is to be one of the top ten most attractive countries for foreign investment. It has set an ambitious goal of attracting $150 billion in foreign investment by 2031, which it intends to achieve through several key projects.

Final Word

The UAE has proven capable of drawing significant sums of foreign investment. Its exceptional performance over the last two years demonstrates proper planning and execution. With this pattern, we should expect more significant advancements in the near future. It would be no surprise if, within the next decade, the UAE leads the globe in foreign direct investment inflows.

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