Foreign direct investment (FDI) inflows are expected to have increased 14 percent to an estimated $2.9 billion in 2018 compared with the previous year, according to the ‘World Investment Report’ by the United Nations Conference on Trade and Development (UNCTAD).
“FDI flows in the [West Asia] sub-region remained uneven. Four countries – Turkey, the United Arab Emirates, Saudi Arabia and Lebanon – absorbed approximately 90 percent of FDI in West Asia,” the report said.
FDI inflows to Lebanon recorded a year-on-year decrease of two percent in 2017.
Despite 2018’s surge in FDI inflows, last year’s deficit in the balance of payments widened to $4.82 billion from a deficit of $156 million in 2017, according to BDL data.
The accumulated FDI inflows to Lebanon over the period 2013-2018 reached a total of $15.7 billion, with an annual average of $2.6 billion.
FDI outflows plunged 20 percent year-on-year in 2018 to $1.1 billion, according to the UNCTAD report. The drop in outflows and the increase in inflows resulted in a 51 percent surge in net FDI inflows, to $1.8 billion.
Overall FDI outflows reached $7.3 billion over the period 2013-2018 with an annual average of $1.2 billion.
Lebanon outperforms comparative regional countries and the average for the Middle East and North Africa in terms of FDI per capita and FDI per $1,000 of GDP, according to the UNCTAD’s ‘Investment Policy Review’, which was released earlier this year. The country will be able to boost FDI inflows further if it addresses a number of impediments to investment, improves the business environment, and focuses on the knowledge economy, the UNCTAD said in the report. The impediments include a mismatch between skills and job opportunities causing brain drain, weak female participation in the labor force, and energy supply shortages, as well as burdensome administrative requirements and institutional weaknesses.