This picture taken from the sea of Dubai on March 3, 2021 shows the skyline of the Gulf emirate with Burj Khalifa in the centre. (Photo by GIUSEPPE CACACE / AFP) (Photo by GIUSEPPE CACACE/AFP via Getty Images)
Dubai, January 18, 2024 – The United Nations Conference on Trade and Development (Unctad) recently disclosed that the United Arab Emirates (UAE) has achieved a remarkable feat in Foreign Direct Investment (FDI) greenfield announcements, securing the second-highest position worldwide, trailing only the United States.
Stellar Growth in UAE’s FDI Greenfield Announcements
Unctad’s Investment Trends Monitor for January revealed a notable surge of 28% in FDI greenfield announcements in the UAE. This impressive growth stands out amidst a broader trend of stability in Foreign Direct Investment in West Asia, with an overall 2% increase. Additionally, Saudi Arabia witnessed a substantial 63% jump in greenfield numbers, as detailed in the same report.
Record-Breaking FDI Flow into the UAE: Foreign Direct Investment
The report highlighted that FDI flow into the UAE reached an unprecedented $22.73 billion in 2022, marking a substantial 10% growth compared to the previous year’s $20.66 billion.
Global FDI Trends in 2023
Globally, FDI flows in 2023 were estimated at $1.37 trillion, reflecting a modest 3% increase over 2022. Despite initial recession fears that subsided as the year progressed, economic uncertainty and higher interest rates impacted global investment. Excluding higher values in a few European conduit economies, the report noted that global FDI flows were actually 18% lower.
Shifting Dynamics in Developed Regions
Developed countries, particularly the European Union, witnessed a notable shift, with FDI turning positive at $141 billion compared to a negative $150 billion in 2022. However, excluding Luxembourg and the Netherlands, inflows to the rest of the EU were down by 23%. In other developed regions, FDI flows stagnated, showing zero growth in North America and declines elsewhere.
Challenges and Opportunities in Developing Countries
Developing countries experienced a 9% decrease in FDI flows, amounting to $841 billion. Developing Asia and Africa reported declines of 12% and 1%, respectively, while Latin America and the Caribbean remained stable, thanks to Central America’s resilience.
International Investment Projects: Signs of Recovery
The report delved into international investment project announcements, including greenfield, project finance, and cross-border mergers and acquisitions. Despite overall negative trends, greenfield project announcements showed a 6% increase in value, signaling a potential recovery.
Outlook for 2024
Unctad cautiously anticipates a modest increase in FDI flows in 2024, as projections for inflation and borrowing costs suggest a stabilization of financing conditions. However, the report underscores significant risks, including geopolitical uncertainties, high levels of global debt, and concerns about further economic fragmentation on a global scale.
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