The UAE spearheaded the surge in foreign direct investment (FDI) flows in Western Asia by the end of 2023, demonstrating regional leadership in economic growth.
As per the United Nations Conference on Trade and Development (UNCTAD) report, FDI in Western Asia increased by 2% last year, with the UAE recording the second-highest annual level globally, following the United States.
The report highlighted the UAE’s global attractiveness in attracting new foreign investment projects. In 2023, the country experienced a 28% increase in new investment projects compared to 2022, marking it as the second-largest rise globally after the United States.
However, the global FDI in 2023 was weak, with diminished flows to developing countries and a stabilization in new investment projects. Cross-border finance and merger and acquisition operations declined, totaling approximately $1.37 trillion, only a marginal 3% growth from 2022.
Remarkably, FDI in the European Union (EU) rebounded from a negative $150 billion in 2022 to a positive $141 billion in 2023, mainly due to significant fluctuations in Luxembourg and the Netherlands. Excluding these two countries, FDI flows to the rest of the EU decreased by 23%.
Developing countries saw a 9% reduction in FDI flows, reaching $841 billion. FDI in developing Asian countries dropped by 12%, in Africa by 1%, while it remained stable in Latin America and the Caribbean.
The year 2023 also faced challenges in international project financing and cross-border merger and acquisition deals, including new projects.
This downturn was attributed to higher financing costs, with a 21% and 16% decrease in the number of deals and project financing, respectively. Announcements of new projects were down by 6%, although their value increased by the same percentage.
Merger and acquisition values were about $280 billion lower than in 2022, and project financing deals decreased by $157 billion. Despite these global challenges, the UAE’s performance stood out, emphasizing its role as a key player in driving FDI growth in Western Asia.
