Foreign direct investment (FDI) in the GCC in 2012 increased slightly over the previous year to reach $26.4 billion.

This brings to an end three consecutive years of declining FDI flows to the region since the pre-financial crisis peak of $61.7 billion in 2008, said a statement quoting data published by UNCTAD in their annual World Investment Report 2013.

The GCC’s positive performance is further accentuated when placed in the context of developing economy and world FDI flows, both of which declined in 2012, by 4.4 per cent and 18.2 per cent, respectively.

The GCC increased its share of developing economy FDI to 3.8 per cent from 3.6 per cent.

Foreign investment in the GCC has benefited from a combination of relatively high hydrocarbon prices, buoyant economic growth and an ambitious programme of government-sponsored investment projects. The region also regularly accounts for over 50 per cent of all FDI to the Arab Middle East and North Africa.

FDI flows within the GCC increased in 2012, with the exception of Saudi Arabia, since it was more susceptible to the difficulties experienced by investors in accessing capital from retrenching international banks and witnessed a 25 per cent decline in FDI to $12.2 billion. However, the kingdom remains the most attractive destination for foreign investment in the Arab world, said the statement.

In the UAE and Kuwait, FDI inflows increased to $9.6 billion and $1.9 billion, respectively. The 25 per cent increase in FDI to the UAE over the previous year was further evidence of the recovery in investors’ appetites after the Dubai World debt crisis.

In Kuwait, the doubling of FDI was primarily the result of Qatar Telecom’s acquisition of additional shares in the mobile operator Wataniya, it said.

GCC FDI flows have also been facilitated by the significant improvements made by individual countries in the ease of doing business, it added.

Meanwhile, FDI flows from the GCC to other countries declined last year, by 17.7 per cent to $18.6 billion. Kuwait was once again the largest investor overseas, accounting for 41 per cent of outflows with $7.6 billion, followed by Saudi Arabia with $4.4 billion and the UAE with $2.5 billion. - TradeArabia News Service