Arab world’s second-largest economy jumps to eighth position from 18th last year on Kearney’s latest list
The UAE has moved up on Kearney’s 2024 Foreign Direct Investment Confidence Index, jumping from 18th to eighth place as the Arab world’s second-largest economy continues to focus on diversifying its economy.
It came second on Kearney’s emerging market index behind China, the world’s second-largest economy rising from third last year.
The UAE’s higher ranking “is a clear reflection of its decisive push towards economic diversification, which [has] firmly cemented the UAE’s position as a magnet for global investment”, said Rudolph Lohmeyer, partner at National Transformations Institute, Kearney Middle East.
The new ranking also “reflects growing investor confidence driven by the UAE’s sustained track record of policy reform”, he said.
The UAE’s economy has continued to grow amid government initiatives to diversify its economy away from oil with an emphasis on the growth of sectors such as manufacturing, tourism and technology.
The country’s economy is expected to grow by 4.2 per cent this year, according to the UAE Central Bank.
The country posted record FDI of about $23 billion in 2022. Official figures for last year have yet to be released.
The UAE also came in second globally after the US in terms of greenfield FDI last year.
The Emirates has also set an ambitious target of attracting Dh550 billion ($150 billion) in foreign investment by 2031 and ranking among the world’s top 10 in terms of attracting FDI, as part of its diversification strategy.
It is also signing Comprehensive Economic Partnership Agreements with a number of countries to grow trade and attract more investment.
“The UAE’s demonstrated resilience, state-of-the-art infrastructure, robust capital markets and a thriving tech ecosystem enable it to offer a uniquely attractive value proposition for global investors, even in the context of intense global competition for investment,” Mr Lohmeyer said.
The US, the world’s largest economy, remains top of the FDI world index, followed by Canada.
China has jumped from seventh to third amid the “loosening of capital controls for foreign investors in Shanghai and Beijing”, Kearney said.
Japan slid from third to seventh, experiencing continued economic woes in the market, which entered a recession in the fourth quarter, the report said.
“Overall, this year’s survey revealed investors’ preference for developed markets, which accounted for 17 of the 25 markets on the Index,” Kearney said.
“However, emerging markets continue to build their presence on the list, with the UAE and Saudi Arabia in particular experiencing meteoric rises from 18th to eighth and 24th to 14th, respectively.”
Saudi Arabia also improved its ranking in Kearney’s emerging market index, moving up to third from sixth last year.
The kingdom, the world’s biggest oil exporter, is transforming its economy under its Vision 2030 diversification agenda.
It has been introducing initiatives and policy reforms that are aimed at cutting its dependence on oil revenue, broadening its non-oil economic base, boosting domestic industries and supporting the development of sectors including technology, property, tourism and infrastructure.
Kearney’s index is an annual survey of global business executives, which rates the markets likely to attract the most investment in the next three years.
Respondents included executive-level managers and all participating companies, from 30 countries, with annual revenue of $500 million or more.
The survey results found investor optimism remains high and has the potential to grow even more in the next three years, with 88 per cent of respondents saying they were planning to increase their FDI in the next three years, 6 per cent more than last year.
The level of net optimism about the global economy also rose but investors expect mounting geopolitical tensions to affect their financial decisions this year.
Investors also anticipate a more restrictive business regulatory environment in developed and emerging markets will lead to risks in the year ahead.
Artificial intelligence is also expected to rise, with 64 per cent of respondents saying they expect their organisation to expand the use of AI in making investment decisions over the next three years.
Source: thenationalnews