UAE foreign direct investment hit $45bn in 2024 on economic diversification boost

The 48% annual FDI increase last year is an international vote of confidence in the UAE's economy, said Sheikh Mohammed

The UAE has launched a strategy to double its cumulative FDI to Dh1.3 trillion by 2031. Victor Besa / The National

The UAE, the Arab world’s second-largest economy, received Dh167 billion ($45.5 billion) in foreign direct investment last year, and the country has its sight firmly set on achieving its aggregate FDI target of Dh1.3 trillion by 2031.

The 48 per cent annual FDI rise in 2024 is a “international vote of confidence in the UAE's economy”, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said on X on Thursday, citing a report issued by the UN Conference on Trade and Development.

“The UAE accounted for 37 per cent of the total foreign investment flows in the region … (Out of every $100 that comes as foreign investment to the region, $37 of it goes to the UAE),” he said.

The country, also ranked second globally in the number of new foreign direct investment projects, after the US, he added.

2031 strategy

Last November, the UAE launched a strategy to double its cumulative FDI to Dh1.3 trillion in the next six years as it continues to push to diversify its economy.

The investment strategy launched at the annual meetings of the UAE government in Abu Dhabi, also aims to triple the cumulative FDI balance to Dh2.2 trillion by 2031, and targets key sectors such as advanced manufacturing and renewable energy.

“We have a clear development agenda drawn up by Mohammed bin Zayed. We have a unified team committed to his instructions, and we have a people united around their leadership. This is the secret to our success,” Sheikh Mohammed said.

“Our message from the UAE: development is the key to stability … and the economy is the most important policy.”

The UAE aims to achieved its 2031 targets through five strategic directions: attracting new investments in priority sectors; expanding FDI in existing projects; strengthening international partnerships; enhancing investor relations; and boosting the UAE's overall competitiveness, the government said at the time.

Focus on FDI

The UAE has been focusing on boost FDI as part of its efforts to diversify its economy away from hydrocarbons.

The Emirates attracted $30.68 billion of FDI inflows in 2023, compared with $22.73 billion in 2022, an annual growth of 35 per cent, the UNCTAD said in its 2024 World Investment Report in June. FDI outflows from the country stood at $22.3 billion, compared with $24.8 billion in 2022.

In terms of cumulative FDI balance, the UAE has “significantly outpaced global growth rates” in the decade through to end of 2023, according to Ministry of Investment data.

To boost FDI, the UAE has unveiled several initiatives including 100 per cent foreign ownership of companies, reduced visa restrictions and incentives for small and medium enterprises. It also unveiled the NextGen FDI programme, which seeks to speed up licensing, increase the issuance of bulk or golden visas, improve banking services and provide commercial and residential lease incentives for technology companies seeking to relocate to the country.

Push for trade deals

The UAE's push to sign a series of Comprehensive Economic Partnership Agreement with its partners around the globe has also helped to boost FDI.

The UAE is currently negotiating a Cepa deal with the EU, and already signed several agreements with major economies, such as India and Malaysia.

Launched in 2021, Cepa deals reduce tariffs and remove trade bottlenecks and boost bilateral investment in priority areas.

The programme helped the UAE hit record non-oil trade in 2024 of $816.7 billion, marking a 14.6 per cent annual increase. The country seeks to increase its foreign trade to Dh4 trillion by 2031.