UAE Leads Arab Region in 2025 FDI Inflows

Jul 8, 2026

91 min

Jul 8, 2026 10:31

UAE tops Arab region in FDI inflows in 2025 with $48.2 billion

## UAE's FDI Success

In 2025, the UAE emerged as the leading destination for foreign direct investment (FDI) in the Arab region, attracting $48.2 billion. This accounted for 40.4% of the total FDI inflows to Arab countries. The UAE also improved its global standing, ranking 17th in the Dhaman Composite Investment Climate Index, moving up two places from the previous year.

## Regional FDI Trends

Overall, FDI inflows to Arab nations decreased by 10% to $119.3 billion in 2025. The majority of these investments were concentrated in just three countries. The region's share of global FDI fell to 7.3%, and its portion of FDI to developing economies dropped to 13.3%.

## Recommendations for Improvement

Dhaman's 41st Annual Investment Climate Report, released in 2026, suggests that Arab countries should adopt integrated programs to enhance their investment environments. Key areas of focus include political stability, institutional reforms, economic policies, and production capabilities. The report emphasizes the need for conflict resolution, modernizing security, and improving governance and legal systems.

## Economic and Institutional Reforms

The report advocates for economic measures like controlling inflation, reforming tax systems, and improving infrastructure. It also highlights the importance of empowering the private sector and diversifying economic resources. Institutional recommendations include updating investment laws, digitizing procedures, and enhancing investor protection.

## Human Capital and Production

To boost production, the report stresses the development of human capital through education and training, increasing labor market flexibility, and improving access to industrial land. It also calls for stimulating research and development and securing local supply chains.

## Arab Countries' Rankings

In the 2025 Composite Investment Climate Index, the UAE led the Arab world, followed by Qatar and Saudi Arabia. Other notable rankings include Oman, Kuwait, and Bahrain. Tunisia and Egypt also performed better than the Arab average, while several other countries ranked lower globally.

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