FDI in CESEE: Recovery amid stabilising economic growth

08 June 2017

At today's press conference, Gabor Hunya presented the new wiiw Report on FDI in Central, East and Southeast Europe. You may watch the main conclusions and findings in a short video interview.

Foreign Direct Investment (FDI) inflow to Central, East and Southeast Europe (CESEE) took a strong  upward  turn  in  2016,  with  an  increase  of  45%  compared  to  the  year  2015;  also greenfield  investments surged. These positive developments took place amid a 2% decline in global FDI  as reported by recent UNCTAD World Investment Report 2017.

An interview with the author Gabor Hunya

Major trends

  • The 2016 FDI recovery was 23% in the EU’s Central and East European region (EU-CEE) and almost 150% in the Commonwealth of Independent States (CIS-4) and Ukraine; meanwhile the Western Balkans experienced a modest 7% decline, and Turkey booked a decline of 30%.
  • The 2016 surge of FDI in the EU-CEE region mainly benefited two counties, the Czech Republic (real estate investments) and Hungary (manufacturing sector investments).
  • In the Western Balkans, Serbia remained the most important FDI target.
  • FDI in Russia took a sharp upward turn in 2016 mainly due the the sale of a 19.5% stake in Rosneft to Glencore.
  • A higher share of FDI in the CESEE countries than before originates in the Netherlands, Luxembourg and other low-tax countries.
  • Austria remains the third most important investor in the EU-CEE in terms of inward  FDI stock, after the Netherlands which hosts multinational holdings and Germany  which integrates most of the international value chains in the region.
  • The number of greenfield investment projects in CESEE was highest in the manufacturing and the business services sectors in 2016.
  • Forecasts for FDI inflows in 2017 point upwards, as the international economic environment continues to improve, although plagued by uncertainties.