In a phenomenal display of economic magnetism and strategic foresight, the UAE has officially emerged as the undisputed leader across the Arab world in attracting FDI throughout 2025. By successfully securing an extraordinary $48.2 billion in Foreign Direct Investment (FDI), the nation captured an incredible 40.4 percent of the entire region’s total inflows, fundamentally reshaping the Middle Eastern financial landscape.
These striking figures were revealed in the 41st Annual Investment Climate Report 2026, officially launched on Wednesday by the Arab Investment and Export Credit Guarantee Corporation (Dhaman) from its headquarters in Kuwait. According to the highly detailed report, the UAE not only topped the regional charts but also secured the prestigious 17th position globally in Dhaman’s 2025 Composite Investment Climate Index, moving up two vital spots from the previous year.
The Broader FDI Reality in the Arab World
While the UAE is celebrating a monumental victory, the wider Arab world faces a more complex economic reality. Citing the latest UNCTAD estimates, Dhaman’s report noted that overall FDI inflows to Arab countries fell by 10 percent, dropping to $119.3 billion in 2025. Capital expenditure (Capex) for FDI projects also suffered a 9 percent decline, falling to $112 billion due to intense geopolitical developments.
Consequently, the region’s share of global FDI declined to 7.3 percent, and its slice of investments directed toward developing economies fell to 13.3 percent. A staggering reality highlighted by Dhaman is that more than 80 percent of the total regional inflows were heavily concentrated in just three Arab countries. The average Arab nation’s ranking remained stubbornly stable at 102nd place globally in the composite index, sitting roughly 23 places below the global average, even though 13 regional countries did record slight improvements.
Strategic Recommendations from Dhaman
To reverse this regional decline and enhance the investment environment across the Arab world, Dhaman strongly recommended adopting flexible, highly integrated reform programmes across four critical areas: political and security; institutional and legislative; economic; and production elements.
At the political and security levels, the corporation urgently called for intensifying peaceful conflict resolution, modernising regional security systems, and decisively combatting organised crime and external interference.
Addressing the institutional and legislative frameworks, Dhaman advised governments to aggressively simplify business laws and accelerate the digitization of commercial procedures. The report heavily emphasized the need for advanced arbitration services, stronger governance, and comprehensive insurance against commercial and political risks to properly protect cross-border investors.
Furthermore, economic stabilization remains paramount. Dhaman recommended aggressive policies to curb inflation, ensure currency stability, enact vital tax reforms, and aggressively empower the private sector by offering lucrative incentives. Regarding production, the report stressed bridging the human capital skills gap, making industrial land more accessible, localizing knowledge, and securing domestic supply chains through robust Research & Development (R&D) investments.
A Unified Vision of Success
The success of the UAE in navigating these exact challenges provides a brilliant blueprint for the region. Highlighting the nation’s proactive approach to capital attraction, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, recently outlined the country’s strategic ambitions:
“Our goal within the National Investment Strategy is to reach an FDI stock of AED 2.2 trillion by 2031 and attract AED 240 billion in FDI inflows annually. These figures are not merely economic indicators; they are the fruit of a national vision, the work of a unified team and global confidence in a nation that has transformed ambition into reality and opportunities into achievements.”
Regional Rankings Unveiled
Dhaman’s 2025 Composite Investment Climate Index provided a thorough overview of how individual nations performed. The GCC countries, alongside Jordan and Morocco, predominantly led the Arab world.
Following the UAE (1st regionally, 17th globally), Qatar claimed second place in the region and 38th globally. Saudi Arabia secured third place regionally (40th globally), while Oman and Kuwait ranked 51st and 52nd worldwide, respectively. Bahrain followed closely at 57th globally. Jordan ranked seventh regionally (74th globally), and Morocco took eighth place (75th globally). Meanwhile, Tunisia and Egypt outperformed the regional average, placing 95th and 100th, respectively. Conversely, 11 other Arab nations languished near the bottom of the global list, ranking between 104th and 158th.
Ultimately, Dhaman concluded that countries in the Arab world must immediately rely on technology, prioritize e-services, and learn from the regulatory agility of nations like the UAE to successfully elevate their FDI competitiveness on the global stage.
