lobal FDI inflows in 2015 increased for the first time after three consecutive years of decline reaching record levels since the financial crises. Total FDI inflows increased by 40% or almost $500 bn to $1.76 Trillion primarily on the back of higher inflows in developed economies which accounted for more than 90% of the increase with a total inflow of $962 bn. Moreover, the share of developed economies in FDI inflows also reached the highest level since the financial crisis recorded at 54.6% of total world FDI inflows in 2015 as compared to 40.9% in 2014. The surge was primarily on the back of an increase in cross-border M&As that increased by 68% year-on-year to reach $721 bn. This was also the highest level of M&A transactions recorded since 2007.
Meanwhile, greenfield investments also contributed to the growth but with a relatively smaller increase of 8.4% to reach $765.7 bn. Nevertheless, according to the report, corporate reconfigurations, which involves minimal increase in actual operations, accounted for the bulk of the increase in total FDI inflows globally and when we exclude such transactions, the increase was a much more moderate 15% during the year.
Within the developed economies, FDI inflows to the US more than doubled year-on-year to $380 bn in 2015 after seeing a steep decline during the previous year. On the other hand, FDI inflows in developing economies increased at a much slower pace of 9.5% or by $66.2 bn to reach $764.7 bn. Europe also saw higher flows during 2015 witnessing an increase of 64.6% to reach $503.5 bn in total FDI inflows.
In terms of source of FDI outflows, Europe topped the growth chart with an FDI outflow growth of $365 bn or 85.3% to reach $576.2 bn in 2015. On the other hand, North America witnessed a fall in FDI outflows primarily on the back of a fall in FDI investments arising out of the US. Asia and developing economies also witnessed a decline in FDI outflows during 2015 with a fall of 16.5% and 15.2%, respectively.
The GCC region continues to account for a miniscule portion of total global FDI inflows. The share of GCC in terms of FDI inflows has been declining over the years reaching a low of $19.8 bn during 2015 with a 5-year CAGR of –15.3%. On the other hand, FDI emanating from the GCC has seen a great deal of volatility over the years reaching almost $25.6 bn during 2015 after declining by almost 75% during 2014 as compared to the previous year.
Amid volatile flow of funds in and out of the GCC, the share of the region in the total global FDI flows has remained minimal. FDI inflows in the GCC reached a new low in 2015, as the slowdown in economic growth rate due to the fall in oil prices affected investor perception of the region. Moreover, the ongoing geo-political situation also contributed to the decline.
In terms of individual country contribution, the absolute growth in FDI inflows was led by UAE which recorded an increase of $153 mn in total inflows closely followed by Saudi Arabia with an increase of $129 mn. Qatar and Oman also recorded small increase in inflows. On the other hand, Bahrain recorded net outflow of FDI reflecting major foreign divestment, whereas FDI in Kuwait saw a steep decline of KWD 660 mn in 2015. UAE also topped the list in terms of FDI outflows from the GCC in 2015 recording a total flow of $9.2 bn followed by Saudi Arabia and Kuwait with outflows of $5.5 bn and 5.4 bn, respectively.
In terms of FDI inward stock in the GCC, Saudi Arabia tops the chart with a total stock of $224 bn followed by UAE at $111.1 bn. On the other hand, UAE is a major investor abroad with the highest FDI outward stock of USE 87 bn followed by Saudi Arabia at $63.3 bn.
Total value of greenfield FDI projects abroad by GCC countries almost doubled to $44.8 bn during 2015 as compared to $24.1 bn during 2014. The growth was primarily on the back of Saudi Arabia which added almost $12.0 bn in newgreenfield FDI projects outside the country with a total value of $13.5 bn. Nevertheless, UAE continues to top the chart with a total value of $22.1 bn followed by Saudi Arabia. Greenfield projects announced within the GCC in 2015 with worldas the investor was topped by Saudi Arabia with a total value of $9.9 bn, almost at the same level as last year, closely followed by UAE that saw a decline of $4 bn to reach $9.0 bn.
Total cross-border M&A transactions in the GCC saw a huge jump in 2015 with net sale transactions pegged at $2.2 bn, a more than three-fold increase from $676 mn in 2014, whereas value of net cross-border purchase transactions increasedby almost 60% to $16.4 bn in 2015 as compared to $10.6 bn in 2014. Qatar continues to remain one of the biggest in terms of net M&A purchases abroad with the highest value in cross border purchase transactions in 2015 recorded at $8.8 bn followed by UAE at $5.2 bn.