UN reports drop in foreign investment in Mideast

The United Nations Conference on Trade and Development (UNCTAD) has reported that 2008 saw a 15% drop in the flow of foreign direct investment (FDI) to the Middle East (not including Turkey).

This is one of the findings of the organization's study "Assessing the impact of the current financial and economic crisis on global FDI flows", which will be published soon.

According to the data, direct foreign investments in Middle Eastern countries reached $61 billion in 2008, compared with $71 billion in the previous year. The drop is attributed to the slowing of the rise in demand for oil in the global markets, the rise in oil production costs and the decrease in revenue for the oil manufacturers.

UNCTAD's findings also reveal a 6.6% drop in the scope of regional mergers and acquisitions with foreign involvement – from $33.8 billion in 2007 to $31.6 billion in 2008.

The report stated that of all of the world's developing markets, the Middle East was the only one that recorded a decline in foreign direct investment last year. In Africa, for example, foreign direct investment grew by 35% in 2007, while Latin America saw a 9.5% increase.

The flow of foreign direct investment to all of the developing markets reached $550 billion last year, compared with $512 billion in 2007 (7% increase), according to UNCTAD.

Doron Peskin is head of research at Info-Prod Research (Middle East) Ltd