Foreign direct investment (FDI) inflows are estimated at $2.56 billion in 2016, up nine percent compared with the previous year, according to the ‘World Investment Report 2017’ released by the United Nations Conference on Trade and Development (UNCTAD).
FDI outflows are also estimated to have grown compared with 2015, jumping 17 percent to an approximate value of $773 million.
The upturn for both inflows and outflows came after a decrease in 2015 when FDI inflows dropped 19 percent and outflows plunged 47 percent.
The upturn in FDI inflows was the result of the positive political developments last year. This included the election of a new president and the formation of a new Cabinet, said Abdallah Harfouch, an economist.
He said FDI outflows were, on average, growing in recent years as local investors were looking to diversify risks beyond the domestic market due to opportunities abroad and unfavorable circumstances locally.
According to Harfouch, investing abroad has become easier due to the advances in telecommunication technology.
Despite the recovery, FDI inflows are still below their pre-2015 levels. Those inflows grew to $4.8 billion in 2009. They began after that point to decline annually, except in 2014.
The steady decline in FDI inflows from 2009 until 2015 was the result of many factors. These included the escalation of regional turmoil, especially in Syria, Harfouch said.
Pressure from the U.S. on the local banking sector, the political stalemate at home, the Gulf ban on travel to Lebanon, and the economic slowdown in countries where Lebanese expatriates work also contributed to the decline in FDI inflows, he said.
The UNCTAD report said Lebanon was one of the strong performers among the West Asian economies in attracting FDI as measured in both FDI stock per capita and inward FDI-stock-to-GDP ratio.
The country’s FDI inward stock grew from $14.2 billion in 2000 to $44.3 billion in 2010 and is estimated to have reached $61 billion in 2016, according to the report.
The FDI outward stock jumped from $352 million in 2000 to $6.8 billion in 2010 and an estimated $13.5 billion in 2016.