- The Kingdom reappears on the Foreign Direct Investment Confidence Index issued by Kearney for the year 2023, ranking 24th globally.
- The Kingdom ranks third regionally and sixth globally in the emerging markets classification
Saudi Arabia once again joined the 2023 Foreign Direct Investment Confidence Index issued by Kearney, ranking 24th globally. This came after the Kingdom was able to record high growth rates in the gross domestic product, which reached 8.7% in 2022, in addition to its comprehensive reforms aimed at strengthening the business environment, and the presence of encouraging expectations regarding the financial situation, in addition to its support for economic diversification in the country.
For the first time since its inception 25 years ago, the global index provides an exclusive classification of emerging markets, in which Saudi Arabia ranked third in the Middle East and sixth globally, reflecting the positive results of the Kingdom's relentless efforts to develop and diversify the economy within the framework of achieving the goals of Vision 2030.
The index aims to provide a classification that enables business leaders to anticipate emerging markets that are most attractive to investors. And with the Kingdom’s ranking third in the world in the emerging markets classification, investors’ confidence in the Saudi market has increased thanks to the Kingdom’s advanced capabilities in the fields of technology and innovation, the adoption of a collaborative approach in investment between the public and private sectors, and the achievement of large and unexpected financial gains from solid oil revenues, in addition to the recovery The tourism sector is one of the repercussions of the pandemic.
In this regard, Rodolphe Le Maire, partner at the National Institute for Transformations, Kearney Middle East, said: “The classification that Saudi Arabia obtained this year is only the beginning, as we are witnessing in the Kingdom the emergence of a new investment model that is characterized by its ability to create both value and mutual interest.” We are also witnessing building strategic plans for long-term investment, as well as promoting innovation in various sectors and fields. In addition, there is a clear focus on enhancing transparency and trust within institutions, which will in turn contribute to raising the investment attractiveness of the Saudi market.
Rankings of the Foreign Investment Confidence Index at the regional level
The UAE and Saudi Arabia ranked 18th and 24th, respectively, in the Foreign Direct Investment Confidence Index, which enhances the presence of Middle Eastern countries on the global index. Moreover, the GCC countries achieved advanced positions in the emerging markets classification. The UAE ranked third in the world, while Qatar ranked fourth in the world rankings.
In 2022, the growth in the UAE's gross domestic product reached a high rate of 7.9%, and the economy in the UAE is expected to continue to grow at a steady pace in 2023 and 2024, with growth rates of 3.2%. and 4.8%, respectively. The index also reveals that the strong business environment in the UAE, as well as its capabilities in the fields of technology and innovation, is one of the main factors in attracting investors.
While Qatar jumped three places on the global ranking index during 2022, mostly due to its hosting of the FIFA World Cup last year, along with the National Vision 2030 that aims to develop and diversify the economy, which led to increased investor interest in the country. The strong growth rate of GDP in Qatar, which reached 4.1% in 2022, registering an increase of 1.5% compared to 2021, can be attributed to the increasing investor confidence in the Qatari market.
While investors are increasingly enthusiastic about investing in many countries in the Middle East; Egypt, Turkey and Morocco ranked 14th, 15th and 16th in the Emerging Markets ranking, respectively.
Global FDI Confidence Index rankings
The report issued by the International Management Consulting Company reflects the cautious optimism of investors regarding the global economy. In fact, more than three-quarters (82%) of investors said they plan to increase FDI in the next three years, while 86% indicated that FDI is the most important to them; It increases the profits of their companies and enhances their competitiveness in the next three years. However, the positive sentiment among investors mixed with their concerns about recession risks.
Commenting on the index's results, Eric Peterson, managing director of the Global Business Policy Council at Kearney and co-author of the study, said: "Although investors are showing optimism about the outlook for foreign direct investment, this year's results reflect some of their investment concerns." He added, "Investors have indicated that rising commodity prices, increasing geopolitical tensions, along with political instability in emerging markets are among the main risk factors over the next three years."
The results of the world rankings were as follows: The United States ranked first in the world rankings, for the eleventh year in a row. Canada regained second place after falling to third place in 2022, while Japan jumped from fourth to third place, up one place from last year. As for Germany, it fell two places to fourth place, and this is likely to happen as a result of the economic challenges and the energy problem caused by the geopolitical crisis in Eastern Europe. While the United Kingdom maintains the fifth position, followed by France in the sixth position. China also jumped from the tenth place to the seventh place, perhaps due to Beijing's decision to abandon its "zero Covid" policies in the quarter of 2022. This year's survey also showed again the preference of investors for developed markets, which represent 19 markets out of 25 countries. included in the global index.
The index for 2023 also revealed the vision of entrepreneurs that globalization will remain the central force in foreign direct investment. The majority of respondents (66%) expect globalization to expand in the next three years, while only 23% of respondents expect it to decline. Entrepreneurs who anticipate the expansion of globalization point to a combination of factors that act as primary driving forces for expansion, such as the availability of digital infrastructure, growing business opportunities, and fewer trade barriers, but at the same time, investors realize that globalization is changing.
For his part, Terry Toland, Director of the Global Business Policy Council at Kearney and co-author of the study, said: “While the results show that investors believe in the importance of globalization and expect its expansion, they also expect the consolidation of regionalization in national economies during the next three years, and that governments will work to implement strategies to enhance its national self-sufficiency. He added, "Our findings indicate that globalization will continue, but its nature may change, which requires entrepreneurs to respond and deal with these potential changes in the future."
Okaz (Riyadh)
