•    The United Arab Emirates returns to the top ranks (21st spot) of the 2017 A.T. Kearney Foreign Direct Investment Confidence Index®
•    Investors see FDI as a growth opportunity globally amid rising anti-globalization sentiment and geopolitical tensions

Dubai 19th April 2017: The United Arab Emirates returns to the A.T. Kearney FDI Confidence Index, ranking 21st. FDI inflows have remained steady in recent years, reaching $11 billion in 2014 and 2015, and greenfield investments nearly tripled to 129 announced projects in that period. 

The IMF forecasts Emirati economic growth will strengthen to 2.5 percent this year and 3.1 percent in 2018. The stronger forecasted growth is in part a function of the reforms pursued by the government to spur foreign investment and diversify the economy away from oil. Investor-oriented reforms include instituting updated bankruptcy and investment laws, simplifying the process for obtaining construction permits, reducing the time required to obtain an electricity connection, and introducing compensation for power outages. The United Arab Emirates has also pledged to continue to advance its technological readiness and deepen its commitment to innovation. The government’s recent efforts show signs of gaining significant traction. In the World Bank’s Doing Business 2017, the United Arab Emirates is highlighted as one of the top 10 economies that made the greatest improvements in business relations.

Rudolph Lohmeyer, Vice President of A.T. Kearney's Global Business Policy Council said, “Investors clearly consider the UAE to be one of the strongest, most diversified economies in the region and value its position as a regional and global gateway.  The UAE's ranking this year is a function of many factors, including excellence in governance, demonstrated resilience, world-class infrastructure and a deep, unwavering commitment to innovation.'  

Three-fourths of companies plan to increase their foreign direct investment in the next three years, according to the 2017 Foreign Direct Investment (FDI) Confidence Index® from global strategy and management consulting firm A.T. Kearney. This is an increase from last year’s results, despite expectations that geopolitical events and rising anti-globalization could have put a damper on FDI worldwide. 

This year’s edition of the Index, entitled Glass Half Full, finds that while global business executives are increasingly concerned about the negative effects of politics and geopolitics, they are nevertheless more bullish on the global economy and FDI prospects. For the third year in a row, global business executives see an increase in geopolitical tensions as the greatest risk in the external environment. Investors’ concerns about geopolitics and rising protectionism are in fact likely driving some of their motivation to increase FDI. In an environment of slowing global trade growth and increasing barriers to trade, FDI may offer a localization strategy for investors in key markets. 

“Investors told us that they are optimistic about the future of the global economy, global uncertainties notwithstanding, and see many quality opportunities for FDI worldwide,” says Paul A. Laudicina, founder of the FDI Confidence Index and chairman of A.T. Kearney’s Global Business Policy Council. “For the first time since the Global Financial Crisis, we saw a rise in the number of emerging markets on the Index.

This could be an inflection point after years of increasing dominance by developed markets on the FDI Confidence Index.” 

The United States again tops the FDI Confidence Index, holding its first-place position for the fifth year in a row. Investors are also more bullish on the US economic outlook than any other economy on the Index. Germany rises to the second position in the FDI Confidence Index, followed by China in third place. The United Kingdom and Canada round out the top five spots. 

Regional highlights 

Middle East and Africa: Despite some continued economic volatility due to low global commodity prices, the Middle East and Africa make a comeback on the Index after a two-year absence. The United Arab Emirates ranks 21st on the Index. South Africa rounds out the Index in the 25th spot. This could signal a desire by global investors to diversify the location of the FDI after several years of an increasing “flight to safety.”

Americas: Investors consistently point to four markets in the Americas region as particularly attractive investment destinations: The United States ranks 1st in the Index for the fifth consecutive year. Canada remains in the top five, falling two spots to rank 5th this year. Brazil ranks 16th, falling four spots from last year. Mexico rises one spot this year to rank 17th. Global investors are very optimistic about the economic outlook in the Americas. Over 40% of investors are more optimistic about the regional economic outlook this year than they were last year. This optimism seems to be almost entirely driven by investors’ bullishness on the US and Canadian economies. In 2016, North America attracted more FDI inflows than any other region in the world, according to UNCTAD estimates, while FDI inflows to Latin America fell somewhat.

Europe: Europe has the largest number (11) of top ranked countries on the 2017 Index—but this is a decline from the 13 European markets that were on the Index last year. Germany rises to 2nd place in the Index, while the United Kingdom gains one spot to rank 4th. France rises one spot to 7th, Spain rises two spots to 11th, and Switzerland falls one spot to 12th. Sweden makes the largest gain to rank 15th, while Italy (13th) and Ireland (20th) both rise three spots. The Netherlands holds steady at 14th, while Belgium (22nd) and Austria (24th) round out the European markets on the Index.  European economies continue to attract significant amounts of FDI last year. The European Union attracted the third-highest level of regional FDI inflows according to UNCTAD estimates.

Asia Pacific: Of all regions, global investors are the most optimistic about the economic outlook in Asia Pacific. Investors point to eight Asia Pacific markets as particularly attractive investment destinations. China ranks 3rd in the Index, continuing its consistent streak of appearing in the top three preferred Index destinations. Japan maintains its 6th place spot, while India continues its rise, improving one place to rank 8th this year. Australia (9th) and Singapore (10th) round out the top ten. South Korea falls one place to 18th this year, while Thailand rises two spots to rank 19th. New Zealand appears on the Index for the first time this year, ranking 23rd. Asia Pacific economies continue to attract significant amounts of FDI. Emerging and frontier markets in Asia attracted one of the highest levels of FDI inflows of any region in the world according to UNCTAD estimates, while FDI inflows to Australia and Japan jumped significantly last year.