Following a period of strong growth, foreign direct investment (FDI) flows into the Middle East have been stunted “as risk premiums weigh on investor confidence”, a new report highlights. Opened FDI projects in the region faced a 10.6% year-on-year decline in 2024.  

According to GlobalData’s FDI Trends in the Middle East (2025) report, in 2025, member nations of the Gulf Cooperation Council (GCC) exhibited high capacity for self-funding through funds such as the Abu Dhabi Investment Authority and Saudi Arabia's Public Investment Fund. However, FDI is still an important factor in driving diversification.

Most of the region’s FDI intake is concentrated in Saudi Arabia and the United Arab Emirates (UAE), which, respectively, had 642 and 594 announced FDI projects between 2023 and 2025, year-to-date. The report highlights that capital market reforms, lower equity caps and limited FDI screening in these locations have contributed to attracting investment. 

GlobalData’s FDI team expects non-GCC nations to develop closer ties to European and Chinese FDI since oil revenues in neighbouring nations have waned. The report highlights that 2025 is set to be a “cooling period with fewer but relatively larger projects in the pipeline”. 

Top source markets and leading sectors 

The US is the region's top investor, accounting for 363 announced projects in the Middle East from 2023 to 2025. The UK, India and China are the next most important source markets. While the overall volume of announced projects in the region has declined in the past few years, it is reflective of global trends.  

The digital economy and tourism sectors attracted the most FDI. Between 2022 and 2024, software and IT services made up 25% of opened FDI projects, and electronics made up 21% of announced FDI projects. Tourism made up 14% of opened projects and 22% of announced projects. Other prominent sectors included renewable energy and diversified industries.