KUWAIT: The Arab Investment & Export Credit Guarantee Corporation (Dhaman) announced a decline in the average Arab ranking in Dhaman’s Composite Index for Investment Components in the Arab Countries for 2023 by two positions to 104th globally, 25 positions behind the global average.
The Director-General of Dhaman, Ahmed Al-Haroun said in his message in the 39th annual report for 2024, which was launched by the corporation at its headquarters in Kuwait on Monday that the slight drop in the index, which covers 158 countries, including 21 Arab ones, and is based on 190 composite and sub-indicators issued by 33 international agencies, was due to a change in the Arab position in the four main groups related to the investment climate, as follows:
•Economic Performance Indicators, which consist of 14 main indicators and sub-indicators, the average Arab ranking dropped by three positions to 92nd globally due to the decline in four internal performance assessment indicators and three external performance indicators. Still, the ranking advanced in six indicators and stabilized in the government debt indicator.
•Political and Security Performance Indicators, which consist of 37 main and sub-indicators, the average Arab ranking fell by one place to 108th globally since it declined in sovereign rating and risk assessment indices by two to five places. But, it stabilized in the PRS Country Risk Index and Sovereign Rating Indices, issued by Standard & Poor’s, Moody’s, Fitch and Capital Intelligence.
•Legislative and Regulatory Environment Indicators, which consist of 55 main and sub-indicators, the average Arab ranking advanced by three places to 99th but remained below the global average. This is due to an improvement in economic freedom, prosperity, corruption perceptions, bribe risks, competitiveness and investment treaties, ranging between one and eight places. Still, the ranking stood in the governance index, while it fell by one place in the Global Startup Ecosystem Index (GSEI).
•Indicators of Production Factors, which consist of 84 main and sub-indicators, the Arab ranking dropped by four places to 105th globally as a result of its decline in digital competitiveness, energy and government AI indices. But, it stood in sustainable development, knowledge and innovation indices, and advanced in logistic services and global talent competitiveness.
Regarding the Arab ranking in the composite index for 2023, the GCC countries, with the UAE ranked first in the Arab ranking and 18th globally though it lost one place compared with the 2022 index. Qatar came second in the Arab ranking and 34thglobally in spite of a one-place fall, while Saudi Arabia came third in the Arab ranking and 36th globally in spite of its two-place drop. Kuwait was ranked fourth in the Arab ranking and 41st globally by advancing by two places. Oman was ranked fifth in the Arab ranking and 51st globally by advance by one position. Bahrain came sixth among Arab countries and 59th globally by improving by five positions during 2023.
Morocco, Jordan, Algeria and Egypt were ranked in the middle of the Arab ranking and between 82nd and 103rd globally respectively, to be better than the Arab average in spite of their decline globally, except for Morocco that advanced by three positions. Other countries, including Tunisia, Iraq, Libya, Djibouti, Mauritania, Lebanon, Syria, Yemen, Palestine, Sudan and Somalia, they ranged between 114th and 158th globally respectively, to be below the Arab average and almost at the tail end of the global 158 level.
The report showed that the final outcome of the changes in the Arab position in international indicators reflected negatively on the Capex of foreign direct projects into the region, which dipped by 11 percent to $181 billion in 2023, despite the hike in the number of projects by 20 percent to 2,001 projects. These projects were mainly concentrated in the UAE with a share of 60 percent of the total, and in Egypt with a share of 22 percent of the Capex. Their cumulative value in the region during the past 21 years hit $1.7 trillion through more than 18.2 thousand projects that created 2.45 million jobs.
The report expected the decline in the region to continue during 2024, especially following the drop in the number of foreign projects in the region according to the FDI Markets database, by 24 percent and the Capex by 61.5 percent to reach $27.4 billion in the first quarter of 2024, compared with the same period in 2023, especially if the regional political and economic tensions continue, particularly in occupied Palestinian territories, Lebanon, Yemen, Sudan, and to a lesser extent Syria, Libya and Iraq.
As for foreign direct investment (FDI) inflows into Arab countries, according to UNCTAD estimates, they declined by 12.4 percent to $67.7 billion in 2023, and the UAE got $30.7 billion, making up 45.4 percent of the Arab total, Saudi Arabia $12.3 billion or 18.2 percent, and Egypt $9.8 billion or 14.5 percent, coinciding with a fall in the region’s share to reach 5.1 percent of the global total and 7.8 percent of the total of developing countries.
On the other hand, Al-Haroun noted the continued growth in intra-Arab investment during 2023, particularly as the number of inter-Arab investment projects rose by 20 percent to 305 projects, and the Capex by 37 percent to $66.3 billion during the same year. Saudi Arabia was the key destination with 110 projects making up more than 36 percent of the total, while Mauritania was in the lead in the Capex with a value of $34 billion constituting 53 percent of the total cost of inter-Arab projects through one project in the renewable energy sector.