The Middle East was considered one of the hottest markets globally and it was attracting a vast amount of foreign investments in the past decade. However, due to the tightening of credit and the deterioration in the global economy, Middle East’s foreign direct investments (FDI) were pulled back by nearly a quarter.
A recent report by the United Nations Conference on Trade and Development (UNCTAD) stated that inflows of FDI to the region dropped by 24 percent reaching USD68 billion in 2009 after six years of growth.
On a country to country basis some countries had different fate from the others; for example, in 2009 Qatar had an increase of FDI inflows of 112 percent and Lebanon had an increase of 11 percent, while the UAE was hit the most and the FDI inflows decreased by 71 percent. Saudi Arabia remained the largest receiver of foreign investments, with inflows reaching USD36 billion, 52 percent of the middle east’s total FDI inflows.
Although the FDI inflows were hit hard in 2009, the FDI outflows were hit harder- they decreased by 36 percent, reaching USD23 billion. This decrease was mainly attributed to the UAE as their FDI outflows fell from USD16 billion to USD3 billion. Saudi Arabia FDI outflows increased the most, from USD1.5 billion to USD 6.5 billion. Kuwait was the largest investor, with USD9 billion in outflows.
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Loading ...Tags: FDI, Middle East, UAE
The quality of FDI flows matter at least as much as the quantity. If inlows go largely into speculative real estate, golf courses with no one to play on them etc, the value added in the long term has to be questionable. Ditto outflows that go to buy “trophy” assets of dubious economic value using highly leveraged funding vehicles. As a non-GCC citizen observing (these days) from outside, the real tradgedy is the paucity of quality, log term private sector jobs for nationals that were created despite the wastage of so much money.
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“Kuwait was the largest investor, with USD9 billion in outflows”…. congested infrastructure, one desalination site, ugly downtown, crap hotels, shameful airport, old schools w/ mediocre cirrocumulus, over 30 years old congested hospitals …yet we Export $ 9 Billion!
Sometimes I really wonder if this country will be around in 50 years time!!
I won’t be around to know, but I still wonder
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saud Reply:
July 26th, 2010 at 3:43 pm
I agree. Spending that amount in Kuwait will make everyone fight to have a bigger piece of the pie thus making it difficult for any plan to go forward.
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Laocowboy2 Reply:
July 27th, 2010 at 8:12 am
Spot on ref the ageing (and inadequate) public infrastructure. As a frequent visitor, this public squalor is striking, and sometimes more like Cairo than a GCC country. Ref the airport, you can only have a good airport in a place as small as Kuwait if you have a good airline (or airlines) to have the hub traffic to justify the investment – and KAC is not that airline. That said, it would not take a vast amount to upgrade the airside and de-bottleneck the immigration and embarkation processes.
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saud: can be fixed if we have transparency. our oversight system is probably the most inadequate. I didn’t want to say that we are run by thieves but I don’t think there is any interest in doing whats right, since that means that will force the fat cats (e.g. alKhorafi) to compete on common grounds. but hey the brother is the head of the Parliament!
Laocowboy2: In many ways Kuwait is the Cairo of the Gulf. have you seen the bags delivery belt in Kuwait’s airport? state of the art!!
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Its true FDI have decreased over the stated period, but so have the rest of the world…
this would be more meaningful if worldwide rankings were placed, only then can we state if GCC countries are truly suffering more than the rest of the world
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Not a chance……
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