BAHRAIN must continue strengthening its investment climate and position itself in high-value sectors such as artificial intelligence, data centres and semiconductors if it is to remain competitive in an increasingly crowded global race for foreign direct investment (FDI), a senior United Nations investment expert said yesterday.
The message came during the Bahrain launch of the World Investment Report 2026, hosted by the Mena Centre for Investment in collaboration with the UN Trade and Development (UNCTAD) at the Swiss-Belhotel Seef.
The report was presented virtually from Geneva by Dr Astrit Sulstarova, chief of the trends and data section in UNCTAD’s Division on Investment and Enterprise, who outlined the latest global investment trends and their implications for Bahrain and the wider Gulf region.
The event, led by Mena Centre for Investment director Dr Hana Kanoo, brought together representatives from the Central Bank of Bahrain (CBB), Economic Development Board (EDB), Information and eGovernment Authority, Finance and National Economy Ministry, Tamkeen, academia and the private sector.
Dr Sulstarova warned that geopolitical tensions and conflicts could weigh on investment flows, although the full impact would take time to emerge.
“Investment reacts more slowly than trade or financial markets,” he said.
“We are still analysing the data from the first quarter of 2026, and it is not easy at this stage to assess the full impact of the current regional conflict on global FDI.”
He said the consequences would differ between oil-exporting and oil-importing economies, while countries both inside and outside the region could be exposed to varying degrees depending on their economic structure and investor confidence.
“We need more data before drawing firm conclusions, but under different scenarios the conflict is likely to depress global foreign direct investment.”
Despite growing uncertainty, Dr Sulstarova said long-term investment trends remained firmly focused on technology-led sectors.
“The report shows that multinational companies continue to invest heavily in digital industries, particularly data centres and artificial intelligence infrastructure,” he said.
“Strategic sectors are becoming increasingly important for future investment decisions.”
He stressed that Bahrain should focus on building an attractive investment ecosystem rather than attempting to compete directly with much larger economies.
“The challenge is not to compete with larger economies on size, but to create the right investment atmosphere and policies that attract international investors.”
He noted that competition to secure major investment projects had intensified globally.
“European countries are increasingly working together as a bloc to attract large-scale investments, while the Gulf is also positioning itself as an integrated investment destination.
“That creates a highly competitive environment, particularly for industries such as semiconductors and advanced digital infrastructure.”
The World Investment Report 2026 shows global FDI recovering in headline terms, although much of the increase remains concentrated in a relatively small number of countries, sectors and projects.
Developed economies recorded the strongest growth, with inflows rising from $649 billion in 2024 to $723bn in 2025, while developing economies received $901bn, only slightly higher than the previous year’s $883bn.
Developing Asia remained the world’s largest destination for investment, attracting $644bn, representing around 40 per cent of global FDI and more than 70pc of flows into developing economies.
Within Asia, investment patterns continued to shift. South-East Asia overtook East Asia as the region’s largest FDI recipient, while India recorded a 44pc increase in inflows, helping drive strong growth across South Asia.
However, the report cautions that investment is becoming increasingly concentrated.
Strategic sectors linked to AI infrastructure, semiconductors, critical minerals and energy-transition technologies accounted for 44pc of global greenfield investment project values in 2025, up sharply from 16pc in 2020.
Most of the increase was driven by investments in data centres, followed by oil and gas and semiconductor manufacturing, while many traditional sectors, including renewable energy, infrastructure and manufacturing, registered declines.
The report also warns that higher headline FDI figures do not necessarily translate into new factories, jobs, infrastructure or technology transfer, underscoring the importance of policies that convert investment into long-term economic development.
Speaking after the presentation, Dr Kanoo said the annual report remained one of the world’s most important references for policymakers and investors.
“The World Investment Report continues to provide valuable insights into the evolving landscape of global FDI flows,” she said.
“Through our collaboration with UN Trade and Development, the Mena Centre for Investment is pleased to bring this important global discussion to Bahrain, fostering dialogue, knowledge sharing and stronger engagement among stakeholders across the region.”
The event concluded with a question-and-answer session focusing on the report’s findings and their relevance to Bahrain’s investment strategy and the wider Mena region.
mohammed@gdnmedia.bh
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