In 2010 foreign direct investment flows (FDI) to the GCC declined for the second consecutive year since the end of the financial crisis to level at $39.8 billion, according to UNCTAD’s World Investment Report 2011 (Chart 1). The GCC, however, still accounts for more than 60% of all foreign investment flows to the Arab world. In spite of the improved economic conditions in 2010, FDI flows to the region registered a drop of 15.3% compared to 2009. Lingering caution by private investors in the wake of the financial crisis, constrained credit to the private sector, and the suspension, cancellation or completion of a number of mega-projects that had hitherto been responsible for sizeable investment flows, are cited as major contributing factors.
The decline in FDI inflows to Saudi Arabia—the historically pre-eminent destination for FDI in the GCC—by 12.4% to $28.1 billion in 2010, for example (see Chart 2), came in part as a result of certain joint-ventures with foreign partners, such as those petrochemical projects between Saudi Aramco and Conoco Phillips and Dow Chemical being cancelled or suspended.
In Qatar, the completion of the last of the LNG Qatargas trains in 2010 resulted in a significant drop in FDI of almost 32% from the previous year.
Kuwait would certainly not have experienced such a sizeable drop in FDI were it not for the uncharacteristically high FDI inflows of $1.1 billion the country received in 2010 due to the recapitalization of Gulf Investment Corporation (GIC), a Kuwait-based but wholly GCC owned investment company that was especially hard hit by exposure to toxic assets. The country’s basic level of FDI over the last decade—a mere $313 million a year on average—is by far the lowest in the GCC (GCC average is $44 billion per annum) and among the lowest in the wider MENA region.
The decline in FDI inflows to Saudi Arabia—the historically pre-eminent destination for FDI in the GCC—by 12.4% to $28.1 billion in 2010, for example (see Chart 2), came in part as a result of certain joint-ventures with foreign partners, such as those petrochemical projects between Saudi Aramco and Conoco Phillips and Dow Chemical being cancelled or suspended.
In Qatar, the completion of the last of the LNG Qatargas trains in 2010 resulted in a significant drop in FDI of almost 32% from the previous year.
Kuwait would certainly not have experienced such a sizeable drop in FDI were it not for the uncharacteristically high FDI inflows of $1.1 billion the country received in 2010 due to the recapitalization of Gulf Investment Corporation (GIC), a Kuwait-based but wholly GCC owned investment company that was especially hard hit by exposure to toxic assets. The country’s basic level of FDI over the last decade—a mere $313 million a year on average—is by far the lowest in the GCC (GCC average is $44 billion per annum) and among the lowest in the wider MENA region.
No comments:
Post a Comment