Print Edition
TT On-The-Go
TT Feed
848
| FDI dip in Middle East, rise in Iran: EIU |
|
 |
 |
 |
Font Size 
 TEHRAN, August 06 – Foreign direct investment (FDI) in the countries of the MENA region slipped again in 2010, dropping by 8.4% year on year to $84.1b, but Iran saw increases in FDI, The Economist Intelligence Unit reported.During 2010 only five MENA countries saw increases in FDI—two of them were non-Arab (Iran and Turkey); the others were Libya, Lebanon and Oman, EIU stated in a report published on August 05. According to the report, In Turkey the modest recovery last year still left the 2010 inflows at only about half the average level in 2007 and 2008. “In Iran, FDI grew by 20% year on year in 2010 (supposedly the sixth-highest rate of growth in the world), despite the impact of international economic sanctions”, EIU wrote. According to the report, the slowdown of FDI in Middle East reflected the lingering effects of the global recession, which had produced a more dramatic year-on-year drop of 27% in foreign investment in the region in 2009. The fall in FDI inflows to the region last year was against the wider trend, as global FDI rose by 5% (to $1.24trn), and foreign investment flows into developing countries rose by 22% year on year to $574bn, with Asia and Latin America posting the largest gains. EIU noted in the report that the political turbulence in the Arab world since the start of 2011 had resulted in a sharp drop of FDI inflows into the region, which suggests that the figure for this year will be substantially lower. The agency offers the view that if the agitation across the region eventually leads to democratization and improvements in governance there could be long-term economic dividends in the form of higher real GDP growth and increased investment inflows. However, a number of countries that have attracted relatively strong inflows in the past few years—including Egypt, Libya and Tunisia—will see little fresh investment in 2011 and only modest growth at best in the following year. The largest recipient of FDI in 2010, as in the previous three years, was Saudi Arabia, although inflows were down by 12% year on year to $28.1b, a figure $10b lower than in 2008. FDI inflows are likely to remain high in Saudi Arabia as major industrial and infrastructure projects continue to make progress—a recent indication of this was the final investment decision taken by Dow Chemical and Saudi Aramco for their $20b chemicals complex in Jubail, which is already attracting significant additional investment that will feed off this plant. Investment in the UAE was again relatively subdued, at just under $4b, compared with the average of almost $14b per year in 2007-08. Egypt also received a healthy inflow of $6.4b of FDI in 2010, slightly down on the previous year, but still relatively strong by regional standards. This was consistent with the positive perception of foreign investors of the economic policies pursued by the former regime, albeit tinged with some concerns about political stability and about the prevalence of corruption. Subsequent events have exposed how deeply flawed the Egyptian model of political repression and economic liberalism was. Egypt now faces an uphill struggle to get FDI back to anywhere near the levels that it achieved in the latter part of the Mubarak era. Investment outflows from the MENA region were generally weak during 2010, the one exception being Israel, whose external investments climbed back to almost $8bn, reflecting the success of Israeli firms in extending their global reach, particularly in Asia.
  Socialize this Subscribe to our RSS feed to stay in touch and receive all of TT updates right in your feed reader
|