The UAE is the most appealing emerging market in the Middle East and North Africa (MENA) and the world’s third-most attractive to investors, according to a new index.
The UAE has ranked first in MENA and third globally in Kearney's 2023 Foreign Direct Investment (FDI) Confidence Index.
Kearney's FDI Confidence Index gives business leaders insights into which emerging markets are most appealing to investors.
Globally, China topped the list, followed by India, UAE, Qatar, Thailand and Saudi Arabia, which are also the only emerging markets included in the world rankings.
The UAE has implemented a series of initiatives and key policy reforms, including business-friendly measures, to boost its attractiveness to both investors and talent.
The UAE is expected to attract a huge chunk of the $66 billion potential FDI inflows into MENA and Pakistan this year. Last year, the UAE logged around $22 billion 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.
Kearney's 2023 Foreign Direct Investment (FDI) Confidence Index
(Reporting by Cleofe Maceda; editing by Seban Scaria)