UAE emerges as resilient FDI hub amid GCC slowdown

Foreign Direct Investment (FDI) flows into the GCC region are expected to experience a slowdown in 2025 following a decade of sustained growth, but the UAE is expected to buck the trend and remain a regional bright spot.

- Issac John [e-mail]

The tempered outlook reflects a confluence of global uncertainties — including evolving US trade policies, declining oil prices, and a more measured pace in the execution of GCC economic diversification projects, according to a new analysis by S&P Global Market Intelligence.

The GCC, led by key economies such as the UAE and Saudi Arabia, has historically been a magnet for FDI, attracting capital with its resource-rich economies, stable currencies, and increasingly business-friendly regulatory environments. However, S&P’s latest forecast underscores that geopolitical tensions, global economic adjustments, and sectoral realignments will moderate growth prospects over the coming year.

Despite this overall cautionary outlook, the UAE is expected to buck the trend and remain a regional bright spot. Recent data from the United Nations Conference on Trade and Development (Unctad) indicates that the UAE was the second-largest recipient of FDI in the Middle East in 2023, garnering over $23 billion, up by more than 28 per cent year-on-year. The Emirates has leveraged its strategic location, progressive reforms, and focus on high-tech and green investments to stay ahead of its peers in the FDI race.