Boom year for foreign direct investment

The UAE attracted US$5.5 billion (Dh20.2bn) more in foreign direct investment last year than it invested abroad, data from the Central Bank shows A total of $7.7bn flowed into the economy, according to the recently released Central Bank annual report. Heading out of the UAE was $2.2bn of investment. \"It\'s a record net inflow since 2000 at least,\" said Giyas Gokkent, the chief economist at National Bank of Abu Dhabi. \"You have more money coming in than going out, so it\'s positive for the local economy.\" Historically, Mr Gokkent added, the two sectors that attracted the most foreign direct investment (FDI) were oil and gas, and property, \"so I would assume a lot of the investment is in that area\", he said. FDI flows last year were still lower than they were during the period before the global financial crisis, when rising oil prices and a buoyant property market stoked activity. During 2007, $14.6bn flowed out, marginally higher than the $14.2bn heading inwards. Other data showed capital outflows rose to $26bn from $2.7bn in 2010. It was the highest outflow since 2008, when the global downturn led to a drop in oil revenue. The rise in capital outflow was likely due to a rise in foreign investments by the country\'s sovereign wealth funds, said Mr Gokkent. Hydrocarbon exports rose to $111.5bn from $74.6bn in 2010. \"The UAE is selling more to the rest of the world than it\'s buying, and that\'s making more oil revenue surplus for the sovereign wealth funds to invest abroad,\" said Mr Gokkent. Oil output was increased last year to help to offset lower production by Libya. Oil prices also surged as a result of unrest in the region and tensions with Iran. The current account surplus rose to $30.7bn, representing about 9 per cent of GDP. This compared with $7.2bn the year before. \"This was the highest absolute figure since 2006 when the current-account balance had been $36.1bn,\" said Mr Gokkent. \"The country registered the highest level of trade surplus in absolute terms on record, driven by higher commodity prices and volumes.\" The data was in line with forecasts and reflected the UAE\'s strength as an energy and regional trade centre, said Mr Gokkent.