According to Kearney’s 2023 Foreign Direct Investment (FDI) Confidence Index, the UAE has emerged as the most attractive emerging market in the Middle East and North Africa (MENA) region and the third most appealing globally for investors.
The index provides business leaders with insights into the most desirable emerging markets for investment. China secured the top spot globally, followed by India and the UAE. Qatar, Thailand, and Saudi Arabia also made it to the list of top emerging markets, which were the only countries included in the global rankings.
To increase its appeal to both investors and talent, the UAE has taken several initiatives and implemented business-friendly policies and reforms.
The UAE is expected to attract a huge chunk of the $66B potential FDI inflows into MENA and Pakistan this year. Last year, the UAE logged around $22B in FDI inflows.
According to Kearney’s survey, more than three-quarters (82%) of investors are looking to increase their FDI in the next three years, up marginally from 76% last year. The majority (87%) also cited FDI as more important for their corporate profitability and competitiveness in the next three years, up from 83% in 2022.
The levels of pessimism among investors, however, have ticked up slightly from 32% to 35%. While more investors are not feeling positive, the majority (63%) have remained more optimistic than pessimistic about the global economy.
Investors’ confidence has been tempered by concerns about downsides, according to Kearney. “Investors see commodity price increases, heightened geopolitical tensions and political instability in an emerging market as the most likely risks this year,” Kearney said.
“These anticipated developments are likely attributable to the ongoing Russia-Ukraine conflict and the continuing effects of the pandemic, including commodity price volatility and high inflation.
Global inflation soared last year to 7.8%. Inflation is currently on the decline, but it is still expected to hover above 5% this year.
