The future of FDI in the Middle East

Foreign Direct Investment (FDI) in the Middle East will remain low throughout 2010, but the long term future looks bright as opportunities can still be found, that's according to the 2010 AT Kearney Foreign Direct Investment Confidence Index, a regular assessment of senior executive sentiment at the world's largest companies.

In comparison to much of the world, the Middle East region fared pretty well during the global financial crisis and investor confidence is actually higher than in previous years. The top destination in the region, the United Arab Emirates, home to Dubai and Abu Dhabi, held up well in spite of a flurry of negative publicity during the survey period. However the impact of the fallout of Dubai World's collapse is not widely accounted for in the report.

The FDI index has been carried out regularly since 1998 and provides a unique look at the present and future prospects for international investment flows. Companies participating in the survey account for more than US$2 trillion in annual global revenue.

Strong emerging economies

Unsurprisingly it was an Asian country that remained the most attractive destination for foreign cash as the APAC region fared even better than MENA countries during the recession. China topped the list as it has done every year since 2002.

The United States regains second place from India, which had surpassed it in 2005. India, Brazil and Germany complete the top five favored investment destinations.

The emerging economies of China, Brazil and India continue to go from strength to strength and will continue to grow in spite of the economic crisis.

Largest consumer markets

AMEinfo.com reports that the highest degree of investor optimism in the outlook for these three countries, with nearly one-third seeing a more positive outlook for China (32 percent) and India (31 percent) compared to one year ago, and 22 percent saying Brazil's outlook had improved. In contrast, investor outlook for the United States was decidedly more negative, with 22 percent of executives having more negative outlook for the country than a year ago.

It was positive to see that the largest consumer markets in the Middle East have now entered into FDI index for the first time, but it remains unclear whether this is due to the sorry state of other nations or whether optimism over Middle East prospects are up in general.

Nonetheless the Middle East fared well in this year's index, where UAE, Saudi Arabia, Egypt and the Other Gulf States, feature among the top 25 FDI destinations. The survey ranks UAE 11th globally and as the preferred destination in the Middle East.

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