WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

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.