Despite Global FDI Dip, MENA nations (notably UAE, Egypt & Saudi) stand out on increased diversification & investor confidence Weekly Insights 20 Jun 2025

Despite Global FDI Dip, MENA nations (notably UAE, Egypt & Saudi) stand out on increased diversification & investor confidence Weekly Insights 20 Jun 2025

1. Global FDI flows tumbled by 11% yoy to USD 1.53trn in 2024; Africa & North America witnessed the fastest growth (75% & 23% respectively)

• UNCTAD’s World Investment Report 2025 revealed a 11% fall in FDI (on a like-to-like basis) globally to USD 1.531trn in 2024, with a clear divergent pattern. Developed nations witnessed a 22% plunge (dragged down by a 58% drop to Europe) while that to the developing nations (accounting for 57% of global FDI) was stable. Protectionism and trade distortions continue to affect FDI flows: early 2025 data indicate record-low deal & project activity, according to UNCTAD.
• US was the largest recipient of FDI in the world, with inflows surging by 20% yoy to USD 279bn, thanks to large scale investments in the high-tech & clean energy sectors. Asia posted an 3% drop in 2024 while flows to Africa grew by 75%, supported primarily by the Ras Al-Hikma megaproject in Egypt (but even excluding the project, flows to Africa grew by 12%).
• The number of announced greenfield project announcements (forward-looking indicator) quickened by 3% to more than 19k – the third-largest level on record. The success story centred around sectors such as semiconductors, EV components and digital economy. Greenfield project activity was strong in India and the UAE. In contrast, international project finance deals declined across major regions: West Asia was the only subregion to show resilience, with deal value increasing by 5% to USD 78bn. 

2. West Asia FDI showed a mixed performance in 2024 alongside the surge in flows to North Africa. Standout countries were the UAE & Egypt.

• FDI flows to developing Asia fell further in 2024: South-East Asia posted a slight increase (+9.7% to USD 225bn). The decline was pronounced in East Asia (-12.4%) and Central Asia (-61.2%) while in West Asia, FDI grew by 4.7% to USD 82bn.
• Within West Asia, UAE emerged as the best performer, attracting USD 45.6bn in 2023 (+48.7% yoy). The country also moved up the ranks of nations attracting most inflows – 10th largest globally in 2024, up from 11th in 2023 and from 21st in 2022. UAE was also the second largest globally in terms of number of greenfield project announcements (1359 projects, with a value of USD 15.6bn). Saudi Arabia saw a drop in FDI inflows: by 31% yoy to USD 15.7bn – despite the drop, Saudi was the 20th largest recipient globally.
• Egypt was the best performer in North Africa, the driving force in Africa’s gains, thanks to investment in the Ras Al-Hikma project. Greenfield projects in Egypt increased in both number (+4%) and value (+30%); IPF commitments also more than doubled.
• While international project finance activity sharply declined in developing Asia (deals by 27% and value by 43%), West Asia was an outlier: deal value increased by 5% to USD 78bn, supported by infrastructure and energy projects (in UAE, Saudi Arabia and Iraq).

3. Foreign US Treasury holdings, at 9.013trn in Apr, remains close to Mar’s record high USD 9.050trn; Saudi & UAE are the 17th and 19th largest holders while Kuwait reached a new record-high

• Foreign holdings of Treasuries edged down by 0.4% mom to USD 9.013trn in Apr, quite close to the record USD 9.05trn touched in Mar (despite April’s trade tariff announcements that had resulted in an initial US Treasuries sell-off).
• Japan and UK (the latter seen more as a proxy for hedge funds) remained the largest two nations holding US Treasuries, while China’s holdings of Treasuries declined to USD 757bn, the lowest since 2009. Interestingly, Canada’s holding (7th largest) fell by 13.6% mom to USD 368.4bn – remember this drop is for the month of Apr, when US announced higher tariffs.
• Saudi Arabia remained the 17th largest global investor in Apr: with its holdings up by 1.67% mom to USD 133.8bn.
• UAE holdings surged in Apr, by 8.1% mom and 61.6% yoy to USD 112.9bn – 19th largest holder of US Treasuries (behind Saudi Arabia and South Korea, but ahead of Germany).
• Kuwait posted a gain of 2.9% mom & 20.7% yoy to a new record-high USD 54.2bn in Apr (previous record: USD 52.7bn Mar 2025).
• Treasury holdings data are an indicator of investor sentiment, given concerns related to the budget, trade tariffs and growing geopolitical uncertainty.

4. UAE GDP expanded by 4.0% yoy in 2024; contribution of the non-oil sector crossed three-quarters of overall GDP

• Real GDP in the UAE grew 4.0% yoy to AED 1.776trn in 2024, with non-oil sector activity driving growth (5.0% yoy to AED 1.342trn). The contribution of the non-oil sector crossed three-quarters of the total (75.5%).
• UAE’s transport and storage sector grew the most in 2024 (9.6% yoy); other fast-growing sectors were construction (8.4%), finance and insurance activities (7.0%), accommodation & food services (5.7%) and real estate (4.8%). UAE’s urban infrastructure projects (e.g. road expansions), financial hubs, and its role as a trade & logistics hub (ports, airports) underscore gains in activity.
• With signing of more CEPAs (to boost trade & investment), non-oil sector expansions (as evidenced by PMIs), recent success of events such as “Make in the Emirates” (driving manufacturing, job creation, non-oil exports) and steady increase in tourism (to be boosted by unified GCC visa) & urban infrastructure development, the near-term future looks promising.
• Distribution of GDP showed the oil sector accounting for just under 1/4th of GDP (24.4%). Among non-oil sectors, wholesale & retail trade (12.1%), manufacturing (11.0%) and the financial sectors were the largest (share of 43.5% together).

5. Consumer prices in Saudi Arabia eased to 2.2% in May alongside steady producer price inflation at 2.0%

• Consumer price inflation in Saudi Arabia eased to 2.2% in May, following two consecutive months of 2.3% readings, as food & beverages prices slowed (1.6% vs Apr’s 2.2%) while other costs also moderated including restaurant & hotels (1.8% vs 2.0%). Housing costs moderated to 6.81% (from 6.85%) – this was the lowest reading since Jan 2023.
• Six major categories (of out 12) continued to show deflation: prices dropped further in furnishings & household equipment (-2.46% from -1.79%) while some declined at a slower pace such as in transport (-0.78% vs 1.03%), clothing & footwear (-0.91% vs -1.19%) and recreation & culture costs fell (-0.58% vs -0.67%).
• CPI averaged 2.17% in Jan-May 2025 vs 1.63% in Jan-May 2024: housing costs remained high, but eased to an average 7.14% from 8.5%; transport costs fell (-1.19% vs -1.56%) while miscellaneous goods & services prices accelerated: up by 3.7% in Jan-May (vs -0.88% a year ago)
• Wholesale prices in Saudi Arabia held steady in May at 2.0%, with monthly declines registered in agriculture & fishery (4.4% vs 4.46%) and metal products, machinery & equipment (-0.3% from -0.09%); “other transportable goods” prices ticked up to 4.3% (from 4.13%).
• Average wholesale prices inflation more than halved in Jan-May 2025 vs the same period a year ago: clocking in 1.6% (vs 3.55%), as “other transportable goods” prices plunged (3.31% from 8.65%).

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