FDI flows globally will likely remain disappointing through 2011, according to the 2010 A.T. Kearney Foreign Direct Investment Confidence Index, a regular assessment of senior executive sentiment at the world’s largest companies. Unlike many emerging markets, the economies of the Middle East fared well and investor confidence is even higher than in past years. The top destination in the region, the United Arab Emirates, home to Dubai and Abu Dhabi, held up well in spite of a flurry of negative publicity during the survey period.
Conducted regularly since 1998 by global management consulting firm A.T. Kearney, the Index provides a unique look at the present and future prospects for international investment flows. Companies participating in the survey account for more than $2 trillion in annual global revenue.
China remains the top-ranked destination by foreign investors, a title it has held since 2002. The United States retakes second place from India, which had surpassed it in 2005. India, Brazil and Germany complete the top five favored investment destinations.
For the first time, the three major emerging markets—China, India and Brazil—all ranked among the top four investment destinations as investors expect these countries to continue to deliver growth despite the economic crisis. Investors also reported the highest degree of optimism in the outlook for these three countries, with nearly one-third seeing a more positive outlook for China (32 percent) and India (31 percent) compared to one year ago, and 22 percent saying Brazil’s outlook had improved. In contrast, investor outlook for the United States was decidedly more negative, with 22 percent of executives having more negative outlook for the country than a year ago.
The largest consumer markets in the Middle East, Saudi Arabia and Egypt, entered the FDI Confidence Index for the first time, indicating investors’ interest in the increasingly affluent consumers in these countries. The Middle East fared well in this year’s index, where UAE, Saudi Arabia, Egypt and the Other Gulf States, feature among the top 25 FDI destinations. The survey ranks UAE 11th globally and as the preferred destination in the Middle East.
“The UAE’s number 11 ranking indicates that investors both have grasped the importance of the Middle East and North Africa region with its 500 million consumers and that they expect the Emirates in general, with Dubai as the preferred entry point, to continue to be the leading hub for investments to the rest of region,” said Dr. Dirk Buchta, A.T. Kearney, managing director, Middle East. Additionally he added, “Other Gulf States (referring to Bahrain, Kuwait, Oman, and Qatar) improved their ranking in comparison to the 2007 FDI confidence index.”
