Dubai, UAE — Foreign Direct Investment inflows to the United Arab Emirates (UAE) increased by 10 percent to $23 billion – the highest ever recorded — in 2022.
The country received the fourth largest number of greenfield projects (997), an 84 per cent increase, behind only India (1008), the UK (1230) and the US (2075), according to the UN Investment Report 2023.
Two of the largest projects in the Emirates included the building of a neutron therapy hospital, medical university and convention center in Abu Dhabi by Star Energy (Austria) in a $1.8 billion joint venture with locally based Royal Strategic Partners and MIG Group, and the building of a $1 billion green hydrogen plant at Khalifa Industrial Zone in Abu Dhabi by Korea Electric Power of South Africa.
UAE’s impressive numbers led to an increase of the projects in West Asia by two thirds. The doubling of the number of projects in Egypt and increases in the number of projects in Morocco, South Africa and Kenya saw Africa improve its tally by 39 percent.
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In West Asia, FDI fell by 14 per cent to $48 billion, despite strong activity in greenfield projects and cross-border Mergers and Acquisitions (M&S). The number of greenfield projects rose to more than 1,800 – two thirds higher than 2021 – and the value of cross-border M&As increased by 18 per cent to $37 billion.
Flows to Saudi Arabia fell by 59 percent to $7.9 billion. Cross-border M&A sales remained high. Among the largest deals was the $16 billion acquisition of a 49 percent stake in Aramco Gas Pipeline by an investor group from the United States, China, Saudi Arabia and Hong Kong, China.
Global foreign direct investment (FDI) flows in 2022 declined by 12Â percent to $1.3Â trillion, after nosediving in 2020 and rebounding in 2021.
The multitude of crises and challenges on the global stage – the war in Ukraine, high food and energy prices, risks of recession and debt pressures in many countries – negatively affected global FDI, the report said.
International project finance values and cross-border mergers and acquisitions (M&As) were especially shaken by stiffer financing conditions, rising interest rates and uncertainty in financial markets. The value of international project finance deals fell by 25Â percent in 2022, while cross-border M&A sales were 4Â percent lower.
The global environment for international business and cross-border investment remains challenging in 2023. Although the economic headwinds shaping investment trends in 2022 have somewhat subsided, they have not disappeared.
Commodity prices that rose sharply with the war in Ukraine have tempered, but the war continues, and geopolitical tensions are still high. Recent financial sector turmoil in some developed countries adds to investor uncertainty.
In developing countries, continuing high debt levels limit fiscal space. UNCTAD expects the downward trend of global FDI to continue in 2023. Early indicators confirm the negative FDI outlook: FDI project activity in the first quarter of 2023 shows that investors are uncertain and risk averse. According to preliminary data, the number of international project finance deals in the first quarter of 2023 was down significantly; cross-border M&A activity also slowed.