São Paulo – Foreign direct investment (FDI) from Middle Eastern countries increased by 65% in 2013 from 2012, according to the World Investment Report 2014 disclosed this Tuesday (24th) by the United Nations Conference on Trade and Development (Unctad). The result was boosted by the Gulf Cooperation Council member nations, group consisting of Saudi Arabia, Bahrain, Qatar, United Arab Emirates, Kuwait and Oman. The FDI, as a general rule, are resources applied to productive sectors of the economy.
According to the organization, these countries have high level international reserves of hard currency. They are traditional producers and exporters of oil, gas and oil products, and therefore have large liquidity in dollar. Each member has increased foreign investments, but, according to the Unctad, Qatar stands out as it has increased fourfold the amount, and Kuwait, which has increased it by 159%.
The report adds that the resources originated in the region should increase in the future. On the other hand, the perspectives for the block as an investment destination are not bright, given the political uncertainties surrounding Middle East.
Last year, the flow of FDI for the nations in the region declined for the fifth consecutive year. The total amount posted was US$ 44 billion, a decline of 9% when compared to 2012, according to the Unctad. “High and persistent regional tensions continue to increase political uncertainty and hold back foreign direct investors,” said the organization on a communiqué.
There are, however, differences between the countries. Investment flow to Iraq, for instance, amounted to US$ 2.9 billion in 2013, an increase of 20% from 2012. In the Emirates, the inflow of resources reached US$ 10.5 billion, an increase of 9% in the same comparison. This has positioned the country as the second FDI recipient in the region last year, only behind Turkey.
Investments in Saudi Arabia dropped by 24% to $ 9.3 billion. This has repositioned the country from the second to third largest FDI recipients in Middle East.
Jordan’s flow has increased, while Lebanon’s and Kuwait’s decreased.
In North Africa, FDI flow stood at US$ 15.5 billion in 2013, down 7% from the previous year. The Unctad, however, points out that the overall level seen is relatively high and investors are expected to return.
Egypt remains as the main destination of investments in the region, in spite of a 19% decline to US$ 5.6 billion from last year. Other North African nations, however, received more resources than in 2012. Morocco and Sudan, for instance, attracted US$ 3 billion each.
Global flow
According to the Unctad, the global flow of foreign direct investment reached US$ 1.45 trillion last year, an increase of 9% from 2012. The organization estimates the total to reach US$ 1.6 trillion in 2014, US$ 1.75 trillion in 2015 and US$ 1.85 trillion in 2016. The projections are still below the record of US$ 2 trillion reached in 2007, before the international financial crisis.
In the years following the crisis, the international flow of direct investments was pushed by emerging countries, and last year these nations received US$ 778 billion, a record value equivalent to 54% of the world’s total.
In the next years, however, developed nations should resume receiving more resources. The Unctad forecasts that these countries’ share should amount to 52% of the total in 2016, after standing below 40% in 2012 and 2013.
Investments in developing countries, however, should reach a higher level in the next years.
Brazil
In Latin America, the FDI flow reached US$ 182 billion in 2013, up 6% from 2012. The increase was driven by Central America Central and the Caribbean.
Brazil, the main destination in the region, received US$ 64 billion, down 2% from the previous year. However the Unctad said that some sectors, such as the primary sector, auto, electronic and beverage industries, have actually received more resources. The organization pointed out the growth potential of the Brazilian auto industry, with new investments announced and under way.
The 2013 result, however, moved Brazil from fourth to fifth position among the nations with highest inflow of FDI. The country is behind the United States, China, Russia and Hong Kong. Russia, on the other hand, moved from the seventh to the third position.
*Translated by Rodrigo Mendonça
