By Staff Reporter
The United Arab Emirates strengthened its position as the Arab world’s leading destination for foreign direct investment (FDI) in 2025, attracting US$48.2 billion in investment and accounting for more than 40 percent of total FDI inflows into the region.
The latest figures were revealed in the 41st Annual Investment Climate Report released by the Arab Investment and Export Credit Guarantee Corporation (Dhaman) at its headquarters in Kuwait.
The report ranked the UAE first among Arab countries and placed it 17th globally in Dhaman’s 2025 Composite Investment Climate Index, improving by two positions compared with the previous ranking.
The UAE’s strong performance was driven by its business-friendly environment, economic diversification strategies, advanced infrastructure, investor-focused policies and continued efforts to strengthen its position as a global trade and investment hub.
The report ranked Qatar second in the Arab world and 38th globally, while Saudi Arabia placed third regionally and 40th worldwide.
However, the overall investment picture across the Arab region remained challenging. Citing estimates from the United Nations Conference on Trade and Development (UNCTAD), Dhaman reported that total FDI inflows into Arab countries declined by 10 percent in 2025 to US$119.3 billion.
More than 80 percent of regional investment flows were concentrated in only three countries, reflecting significant differences in investment performance among Arab economies. The region’s share of global FDI also dropped to 7.3 percent, while capital spending on FDI projects across Arab countries decreased by 9 percent to US$112 billion.
Dhaman attributed the decline largely to continuing geopolitical challenges and economic uncertainty affecting investor confidence.
Despite progress in several countries, the average global investment climate ranking for Arab nations remained at 102nd place, leaving the region 23 positions behind the global average.
To improve competitiveness, Dhaman called for wide-ranging reforms focusing on political and security stability, stronger institutions, modern legal frameworks, economic policy improvements and investment in human capital.
The organisation recommended measures including simplifying investment regulations, expanding digital government services, controlling inflation and increasing vocational training programmes to address skills shortages.
Beyond the UAE, Gulf Cooperation Council (GCC) countries, along with Jordan and Morocco, continued to dominate the top positions in the Arab investment rankings. However, several other Arab economies ranked much lower, highlighting a widening gap in investment competitiveness across the region.
The UAE’s continued leadership in attracting foreign capital reinforces its growing role as a key investment gateway between the Middle East, Africa, Asia and global markets.
Source: Emirates News Agency
