The UAE has jumped four spots to 15th position in the latest Foreign Direct Investment(FDI) Confidence Index report from US-based management consulting firm Kearney.
Other emerging economies that feature in the report, China is ranked 12th, and Brazil is ranked 24th which ranks 25 countries that are expected to draw the most investment over the next three years. The US remained in the first position, followed by Canada and Germany. The UK, Japan, France, Italy, and Australia are all among the top FDI rankings.
According to Kearney’s report, the UAE’s “striking rise in the rankings this year is likely a result of its advanced technological infrastructure and high innovation levels, as well as its efficient response to the pandemic.”
In December, the UAE joined Bahrain as the first country to approve the COVID-19 vaccine, with plans to vaccinate the entire population by the end of 2021. “Behind Israel and Seychelles, the UAE has vaccinated the highest portion of its population, which should boost economic and investment prospects further,” the report said.
The UAE is also taking steps to draw more FDI into the country. The country had unveiled a new industrial strategy earlier this week, aiming to increase the contribution of the industrial sector to $81.6 billion in the next ten years, up from $36.2 billion currently.
Last year, the Arab world’s second-largest economy overhauled its commercial company law to draw more international capital and annulled the requirement that onshore companies have an Emirati shareholder. However, in the aftermath of the coronavirus pandemic, the FDI Confidence Index showed a substantial drop in overall optimism about the global economy.
The report said that “this year’s rankings point to continued apprehension and uncertainty about how quickly the global economy will recover post-COVID. In addition to the fall in confidence about the economy, most of the overall scores for the top 25 countries have fallen compared with previous years. Only 57 percent of investors are optimistic about the three-year global economic outlook, which is much lower than the corresponding figure last year of 72 percent prior to and at the onset of the pandemic.”
According to the United Nations Conference on Trade and Development, global FDI fell 42 percent in 2020 and is projected to fall even further this year as the pandemic continues to slow economic recovery. At the end of December, foreign investment flows had fallen to $859 billion, down from $1.5 trillion in 2019.
China, the world’s second-largest economy, fell four places to 12th place, owing to concerns about the effect of US trade tensions on its development.
Mr. Erik Peterson, Managing Director of Kearney’s global business policy council and co-author of the study pointed out “overcoming COVID-19 will be key to global economic recovery and the improvement in FDI flows as the two go hand in hand.”