The UAE has recorded a 44.2 per cent ($20 billion) jump in foreign direct investment (FDI) in 2020 when global FDI flows collapsed, falling 42 per cent from $1.5 trillion in 2019 to an estimated $859 billion, according to the UNCTAD Investment Trends Monitor.
Such a low level in global FDI flows was last seen in the 1990s and is more than 30 per cent below the investment trough that followed the 2008-2009 global financial crisis.
Despite such sharp decline in global FDI last year and the outlook remaining weak over the evolution of the COVID-19 pandemic, it is indeed no ordinary feat for the UAE to beat the global trend in attracting a significantly high growth in FDI inflows.
While the effects of the pandemic on global investment flows are expected linger for longer with investors likely to remain cautious in committing capital to new overseas assets, the UAE has earned its position as a safe and attractive investment destination.
Back on growth trajectory
Despite the impact of COVID crisis on the local economy, the federal government’s fiscal strength and the massive government support schemes by both federal and individual emirates have collectively put the economy back on the economy back on the growth trajectory.
The broader policy response to the pandemic in terms of economic support and health care measures have demonstrated the UAE’s capacity to respond to shocks quickly and efficiently.
At the outset of the pandemic, the UAE Central Bank was quick to launch the Targeted Economic Support Scheme (TESS), initially an Dh100 billion stimulus package that was later scaled up to Dh256 billion (equivalent to 20 per cent of GDP).
In addition to a Dh50 billion zero-cost funding facility provided to banks in order to reschedule the loans of borrowers affected by the pandemic, the stimulus package also included a host of regulatory forbearance measures that enhanced banking sector liquidity.
The UAE was also among the first countries to begin to roll out coronavirus vaccines, which are provided free of charge to the population. Consequently, by early April, the UAE had provided at 87.55 vaccinations per 100 people, representing the second highest rate of vaccinations globally, after Israel.
A closer look at the components of FDI inflows into the UAE shows that global investors have covered most investment opportunities available in the country, ranging from oil & gas, digital economy, artificial intelligence, internet of things, blockchain, medical know-how, augmented and virtual reality (AR and VR), robotics, self-drive automobiles, renewable energy, innovation and agritech; reinforcing the growing popularity of the UAE as a mature global investment destination.