Foreign direct investment (FDI) inflows to West Asia in 2012 continued a downturn that began in 2009, according to the United Nations Conference on Trade and Industry's (UNCTAD) World Investment Report 2013.
The report was launched at a meeting at the Diplomat Radisson Blu Hotel, Residence and Spa.
FDI to the GCC states remained almost unchanged.
FDI to the West Asia region decreased by four per cent in 2012 to $47 billion, half the level of 2008, the report says.
The report, which is subtitled "Global Value Chains: Investment and Trade for Development", was released at leading financial centers across the world including Bahrain.
"Growing political uncertainty at the regional level and subdued economic prospects at the global level are holding back foreign investors' propensity and capacity to invest in the region," the report says.
The overall figure hides important differences among countries, the study notes.
A large fall in FDI flows was registered in the two main recipient countries – Turkey, down 23pc to $12.4bn and Saudi Arabia, down 25pc to $12.2bn.
However, FDI to these two countries still accounted for 52pc of the region's total inflows.
For the first time since 2006, Saudi Arabia ceded its position as the region's largest recipient country to Turkey.
Despite the strong decline registered in Saudi Arabia, FDI to GCC countries as a whole remained at almost the same level in 2012 at $26bn because of significant FDI growth in all other countries within the group.
FDI to the UAE increased by 25pc to $9.6bn, continuing a recovery initiated in 2010 but remaining below the level of $14bn that was reached in 2007.
High public spending by Abu Dhabi and a strong performance by Dubai's non-hydrocarbon sectors helped rebuild foreign appetites for FDI in that country.
Saudi Arabia and the UAE alone accounted for 83pc of FDI inflows to the GCC economies.
FDI to Kuwait more than doubled, reaching $1.9bn, boosted by Qatar Telecom's acquisition of additional shares in Kuwait's second mobile operator Wataniya, which raised its stake to 92.1pc.
FDI inflows also increased in Bahrain, Oman and Qatar, the report says.
FDI to non-GCC countries in the region declined by 9pc to $21bn due especially to the large drop in FDI to Turkey. Lower global growth and a prolonged fiscal tightening in the European Union – Turkey's largest market – have reduced demand for Turkey's exports, thus affecting export-led FDI, the report says.
Gulf Daily News