UNCTAD: Gulf Countries a Global Source of Investment via Their Sovereign Wealth Funds
Al Arabiya Business – Dr. Ashraf Abdel Ghaffar, Chief Economist of the United Nations Conference on Trade and Development (UNCTAD), stated that global growth in foreign direct investment (FDI) in 2025 was primarily driven by investments linked to the technology sector, particularly data centers, semiconductors, and artificial intelligence.
In an interview with Al Arabiya Business on the sidelines of the launch of UNCTAD’s World Investment Report in Egypt, Abdel Ghaffar noted that the increase in FDI flows was not evenly distributed across different regions. He explained that advanced economies were able to attract significantly more investments than developing countries, thanks to their infrastructure readiness and capacity to absorb modern technological investments.
Regarding the Middle East, Abdel Ghaffar said that regional countries had succeeded in attracting substantial FDI prior to the recent escalation of tensions. He pointed out that the United Arab Emirates ranked among the top global destinations for investment, attracting approximately $49 billion, while Saudi Arabia continued to achieve strong levels of FDI inflows.
He added that Gulf countries are important not only as investment destinations but also as major global sources of investment through their sovereign wealth funds, which provide them with greater flexibility in responding to economic and geopolitical changes.
Abdel Ghaffar clarified that rising oil prices during periods of tension can increase dollar revenues for oil-exporting countries, generating additional financial surpluses that can be directed toward future investments via sovereign wealth funds or various investment institutions.
He noted that these surpluses represent what is known as “dry powder”—funds ready for investment when suitable opportunities arise—which could support investment activity in the region over the medium to long term.
He stated that the future outlook for the Gulf and the Middle East is not as bleak as some might believe, but includes positive aspects supported by rising oil revenues and the strong investment assets held by many countries in the region, despite ongoing uncertainty related to geopolitical developments.
Abdel Ghaffar pointed out that advanced economies recorded an 11% growth in FDI flows compared to the previous year, while the increase in developing countries did not exceed 2%. This reflects investors’ preference for markets with advanced infrastructure capable of attracting projects related to digital transformation and advanced technology.
He explained that current geopolitical tensions remain a key factor influencing investment decisions, often leading to the postponement or even cancellation of investment plans, which could negatively impact FDI flows in the near future.
However, he added that the picture is not entirely negative, noting that geopolitical tensions typically drive up oil prices, which in turn stimulates increased investments in the energy sector, whether in renewable energy, alternative energy sources, or certain activities related to traditional fuels.
He emphasized that the future of global FDI flows remains uncertain, making it difficult to determine whether FDI will decline in the coming period, given the interplay of geopolitical and economic factors influencing investor decisions.
