UAE Ranked Ninth in Kearny FDI Global Confidence Index

The UAE and Saudi Arabia, the two economic power houses in the Arab world, are among the top 25 most promising countries for foreign direct investment (FDI) in the world according to “The 2025 Kearney FDI Confidence Index: World at inflection,” released by the US-based global management consulting firm A T Kearny.

While the UAE has been ranked ninth, losing one place from being eighth in 2024, among the top 25 nations, Saudi Arabia has improved its position by climbing from being 14^th and is ranked 13^th in the list for 2025, the index said.

Despite falling one notch from last year, the UAE remains an economic leader with anticipated output growth of 4.8% and 6.2% in 2025 and 2026, respectively, a factor that survey respondents value the most in the market.

Furthermore, the UAE is striving to boost logistics as a driver of growth and an example of this is the Etihad Rail project, which aims to connect major hubs across the region.

Saudi Arabia climbed up one place in the Index as beyond its economic credentials, the Kingdom is establishing itself as a global tech hub. To that end, in November 2024, it announced Project Transcendence—a $100 billion initiative to develop an AI ecosystem built on data centers, start-up support, and robust talent recruitment.

US Top FDI Destination

For the 13^th year in a row, the US has been ranked first on the Index. A plurality of investors (45%) cited the market’s technological innovation as the strongest reason they would choose to invest there, followed by its economic performance (40%).

The US is consistently ranked in the top three economies in the World Intellectual Property Organisation’s Global Innovation Index, and is expected to remain the world’s fastest growing G7 economy, expanding at 2% this year.

Canada maintains its second place ranking for the third consecutive year and remains one of the top five markets for the 13^th year in a row as its infrastructure quality remains the most attractive quality for investors.

Europe’s Share

The regional breakdown showed that Europe retained the greatest share of the top 25 markets, with 11 economies—one more than last year. Norway and Belgium re-joined the rankings at 19^th and 22^nd respectively, while Poland fell from the top 25.

Though the EU is still projected to grow at around 1.5% over the next three years, marking a modest improvement from the GDP growth rates of the past two years, which landed at 0.5% and 0.8%, respectively.

Developed Markets

Developed markets make up 19 of the top 25, led by the US, the UK, and Canada with the investors highlighting the strength of the US technological innovation and Canada’s high infrastructure quality as top factors to invest in these markets.

The UK and Germany lead in Europe, holding the 3^rd and 5^th places, respectively, benefitting from perceptions of tech innovation and economic performance. In Asia Pacific, Japan is ranked 4th on the Index, also benefitting from continued strength in technology innovation, and strong wage growth besides indicating that they may be seeking perceived safety and stability in a volatile world. China has slipped from 3^rd to 6^th place, likely reflecting the market’s economic challenges, including an ongoing property crisis and trade uncertainty.

According to the index, domestic economic performance emerged as a top priority for investors. Efficiency of legal and regulatory process and domestic economic performance tie for the top two most important factors for investors when choosing where to make their foreign direct investment.

The elevation of these issues showed that investors were increasingly focused on economic indicators when choosing where to place their FDI, a fact further validated by the survey respondents specifically citing economic performance as the primary reason to invest in 12 of the top 25 markets.

Key risks related to a rise in commodity prices and geopolitical tensions also reflected the investor concerns about rising global uncertainty. Investors were concerned about rising geopolitical risk and the potential for subsequent supply chain disruptions, which could push commodity prices higher.

Investor perception of the European Union (EU) is generally favourable, though concerns are highest among Europe-based investors. More than two-thirds of investors have a favourable view of the EU, and 60% agree that they prefer to do business in the EU over any other region.