The UAE saw a net FDI inflow in 2020

The UAE recorded a net inflow of private sector foreign direct investment (FDI) in 2020, for the first time since 2013, according to preliminary balance of payments data.  Inward FDI grew 11.1% in 2020 to USD 19.8bn while outward FDI declined by -10.8% y/y to USD 18.9bn.  The growth of foreign investment in the UAE last year is especially notable given the estimated -42% decline in global FDI flows (UNCTAD).

Dubai accounted for just over a third (USD 6.7bn) of the UAE’s inward FDI according to press reports citing data from Dubai FDI. The main source countries for direct investment into Dubai last year were the US, France, Japan, the UK and Germany.  Investment into the accommodation & food services sector accounted for around 40% of last year’s FDI into Dubai, with electricity generation and information services also key beneficiaries.     

FDI into the UAE had increased significantly in 2019, on the back of large investments into Abu Dhabi’s energy sector.

UAE net FDI

Source: Haver Analytics, Emirates NBD Research

Current account surplus narrowed to 5.8% of GDP in 2020

The UAE recorded a current account surplus of USD 21bn or 5.8% of GDP in 2020, much higher than the 1.6% we had pencilled in, but the smallest surplus since 2017.  While hydrocarbons exports fell sharply as we had expected, imports were lower than we had forecast, down almost 10% y/y. 

Private transfers, which include workers' remittances, fell by -8.5% in 2020 according to balance of payments data.  Separately, the UAE central bank published data on “outward personal remittances” which showed these declined by -3.8% in 2020.  The top three destination countries for outward remittances in Q4 2020 were India, Pakistan and the Philippines.  

We now expect the current account surplus to widen to 7.2% of GDP this year, on the back of higher oil & gas export revenues and as well as growth in non-oil exports.