Greenfield FDI announcements in the United Arab Emirates (UAE) rose by 28% in the third quarter of 2023, UNCTAD said in its Investment Trends Monitor report published last week.
According to the UN’s investment promotion arm, the year-on-year growth in FDI announcements marked the second-highest number recorded in the world after the US. Neighbouring Saudi Arabia also recorded a 63% increase in the number of FDI projects announced nationwide.
“Trends by industry in 2023 show project numbers rose in global value chain (GVC)-intensive sectors (+16%), especially in automotives, textiles, machinery and electronics,” according to the UNCTAD report.
Overall, UAE FDI inflows reached $22.74bn in 2022, a 10% increase from 2021 (20.67bn). One market that has seen significant growth in recent years in the country is the information and communications technology (ICT) sector. A report published by the Middle East Institute indicated that ICT spending in the UAE is expected to reach $6.27bn by 2024. Around the world, GlobalData expects the ICT sector to grow at an annual rate of 7.6% and reach $466bn by 2026, up from $323bn in 2021.
The government in Abu Dhabi has been on a path to diversifying its economy away from hydrocarbons and stimulating growth in the private sector.
At the political level, the country held the 28th edition of the United Nations Climate Change Conference (COP28) last year. The conference took place in Dubai and reunited 85,000 participants, including 150 heads of state and government, to discuss the next steps to lower carbon emissions worldwide.
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According to the US Department of State, businesspeople prefer to invest in the UAE due to the country’s “political and economic stability, excellent infrastructure, developed capital markets, and a perceived absence of systemic corruption”.