BEIRUT (AP)- Direct foreign investments to the Arab world increased 20 percent in 2008 compared to the previous year, even as the region grappled with the impact of the global economic meltdown, the head of an Arab investment body said Monday.
The gains, which came even as regional and global equity markets saw an exodus of capital, were largely tied to inter-Arab investments, said Fahad Al-Ibrahim, the director-general of the Arab Investment and Export Credit Guarantee Corporation, a Kuwait-based autonomous Arab regional organization that aims to promote Arab capital mobility.
Foreign direct investments to 17 Arab countries increased to $89 billion in 2008 compared with $74 billion in 2007 for all 22 of the Arab League’s member states, Al-Ibrahim said. Inter-Arab investments in 2008 surged 64 percent, reaching $34 billion compared with $21 billion in 2007.
The disclosure came during the opening session of a two-day Arab investment forum in which Arab experts and officials are to assess the impact of the global recession on the region.
The financial meltdown and credit crunch have hit the Arab world — though some countries have fared better than many in the world despite the collapse of oil prices in the second half of 2008 from their mid-year record high of $147 per barrel.
Some of the region’s stock markets recorded declines of as much as 60 percent last year before regaining ground in 2009. Real estate markets in the region are also under pressure, though most are still well-supported by a shortage in affordable housing for a growing, and increasingly younger population.
Countries like Lebanon, Egypt and Jordan, that lack significant oil wealth, have been counting on oil-rich Gulf Arab states to keep investments flowing in as they look to offset the impact of the credit crunch.
But Nabil Itani, the chairman and general manager of Investment Development Authority in Lebanon, said there should be more work to increase inter-Arab investments, which account for only four percent of the world’s total investments.
He also warned that most of the inter-Arab investments were in the real-estate sector and services, while sectors such as agriculture, industry and trade were garnering less funds and attention.
Lebanon’s Trade Minister Mohammed al-Safadi said the international crisis has shown the importance of Arabs investing in Arab countries.
“It is important to support all what would lead to keeping part of Arab investment in the Arab world that is full of opportunities,” al-Safadi said.