Despite current challenges, growth in foreign direct investment to Egypt, Iran, Iraq, Lebanon and Jordan should overtake the expansion of flows to the GCC by 2019, according to a new report.
The Centre for Economics and Business Research (CEBR) said the five economies were attractive to multinationals because of their large consumer bases.
“In terms of FDI, the UAE and Qatar are two major destinations, but what is interesting are those markets which have been less on the radar of investors but have huge potential,” said Charles Davis, the director at the CEBR and author of the report, which was produced for the company’s economics research partner, ICAEW. “These five economies have potential for catch-up in growth and an increased consumer market.”
Egypt’s economy has been struggling after two revolutions in little more than two years, with instability weighing on private sector output and pushing the budget deficit into double-digit figures. But many foreign companies already operate there, including banks such as HSBC and Emirates NBD, and consumer goods companies such as Procter & Gamble and Unilever.
Egypt is the most populous country in the region, with a population exceeding 80 million. The CEBR said it expected Egypt’s GDP to grow 2.3 per cent this year, 3.1 per cent next year and 3.8 per cent in 2016.
In Iran, the French car marker Renault is among the companies that has expressed an interest in investing should sanctions related to the country’s nuclear programme be peeled back. Its population of 78 million is more than twice that of Saudi Arabia. Still, the disruptive combination of stagnant economic growth and high inflation meant GDP expansion would remain below 2 per cent until 2016, according to the CEBR.
In Iraq, economic growth is forecast to accelerate to 6.5 per cent this year, moving up to 8.6 per cent by 2016, despite increasing violence. Since the toppling of Saddam Hussein in 2003, western and Asian oil majors have vied for a slice of lucrative energy contracts.
The CEBR also said that economic prospects for Lebanon and Jordan would improve beyond this year.
The Most recent data shows FDI into the GCC rebounded strongly in 2012 after three years of falling inflows. Money into the UAE swelled by 25 per cent to US$9.6 billion in 2012, according to the United Nations.
tarnold@thenational.ae
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