Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at wiiw FDI Report 217 FDI in Central, East and Southeast Europe: Recovery amid Stabilising Economic Growth Gábor Hunya
2 Main FDI trends in 216 Global FDI declined but inflows in CESEE increased - Balance of payments statistics, directional principle against revised 215 data; methodology uneven Economic growth stabilised or improved in CESEE and its main investors As EU transfers were down, FDI became more prominent in financing investments in 216 FDI stock by investing countries: increasing role of the Netherlands (tax optimisation) FDI stock by activites: manufacturing or finance (capital intensity) Greenfield investments also down globally, but up in CESEE - Higher number of projects in manufacturing and services; higher amounts of capital in oil and gas exploration and energy generation Austria keeps rank 3 as investor in the region
3 Increasing FDI inflows in CESEE, but high volatility by region FDI inflows in 216 up by 45% against 215: EU-CEE +23%, Western Balkans -7%, Turkey -3%, CIS-3 and Ukraine +54%, Russia +219% EU-CEE Western Balkans Turkey CIS-3 + Ukraine Russia 45 4 35 3 EUR million 25 2 15 1 5 21 211 212 213 214 215 216 EU-CEE: European Union - Central and Eastern Europa. CIS-3: Belarus, Kazakhstan, Moldova. Source: wiiw FDI Database.
4 Increasing inflows in HR, CZ, HU, RO, AL, MK, KZ, RU, UA FDI inflows, EUR million, 214-216 16 14 214 215 216 RU 214: 22,37, 216: 34,12 12 EUR million 1 8 6 4 2 BG HR CZ EE HU LV LT PL RO SK SI AL BA XK MK ME RS TR BY KZ MD RU UA LT 214: -18; 216: -188. SK 214: - 386; 215: -176; 216: -267. Source: wiiw FDI Database.
5 FDI inflow increased in comparison with total investment FDI inflows in % of GFCF, 28-216 25 EU-CEE Western Balkans + Turkey CIS-4 + Ukraine 2 15 1 5 28 29 21 211 212 213 214 215 216 Source: wiiw FDI Database and wiiw Annual Database.
6 EU transfers declined, role of FDI increased in investment financing in 216 Transfers on capital account, FDI net, and FDI liabilities in % of GFCF 2 15 1-5 -1 2 15 1 5 5 Transfers FDI net FDI liability Czech Republic 29 21 211 212 213 214 215 216 Poland 35 25 15 5-5 -15-25 -35-45 -55-65 15 1 5 Hungary 29 21 211 212 213 214 215 216 Romania 29 21 211 212 213 214 215 216 Source: wiiw Annual Database. 29 21 211 212 213 214 215 216
7 More greenfield projectes and higher capital investment Greenfield FDI projects 213-216: number of projects, announced capital investment in EUR million and number of jobs to be created Number of projects (right scale) Investment Job creation 3 15 25 2 1 15 1 5 5 213 214 215 216 Source: http://www.fdimarkets.com.
Differences in specialisation in manufacturing or services Share of main activities in the number of greenfield projects, in %, 216 Services Electricity Construction Logistics, Distribution & Transportation Sales, Marketing & Support Manufacturing 1% 8 8% 6% 4% 2% % BG HR CZ EE HU LV LT PL RO SK SI RS TR RU Share of main activities in the capital investments of greenfield projects, in %, 216 1% 8% 6% 4% 2% % BG HR CZ EE HU LV LT PL RO SK SI RS TR RU Remark: Excluding mining and recycling. Source: http://www.fdimarkets.com.
Rank 1 for the Netherlands on account of tax optimisation; stable rank 3 for Austria with about 7.3% of the stocks 9 Inward FDI stock in EU-CEE and Western Balkans by major home countries, in %, 21 and 215 EU-CEE 8. 7.3 3.9 3.8 19.2 2.2 11.1 7.2 13.4 6. 11.2 1.6 4.5 5.8 Austria France 6.1 Germany 9.2 Luxembourg 13.3 Netherlands other EU-15 2.4 EU-CEE 7.3 United States Cyprus+Russia 2.5 other countries Western Balkans 6.9.8 Source: wiiw FDI Database. 2.1 18.2 15.7 19.3 2.3 6.2 1.7 8.7 13.4 12.4 1.2 18.9 12.5 16.3 2.2 4.6 2.7 15.9 Austria Germany Greece Netherlands Russia other EU-15 EU-CEE United States Cyprus+Russia other countries
1 Austrian greenfield projects in CESEE modest recovery, but still only rank 8 or 9 in the region 14 Number of projects in CESEE Investment in CESEE, EUR billion Share in total number Share in total investment 12 1 8 6 4 2 21 211 212 213 214 215 216 Source: http://www.fdimarkets.com.
11 Outlook for 217 Stronger economic growth and more FDI expected, but not in all CESEE countries FDI will increase in EU-CEE and the WB as local economies are recovering further and European companies invest more Also EU transfers will increase and support an investment recovery together with FDI in EU-CEE First-quarter FDI inflows not particularly high may not be of much relevance More new greenfield projects, first of all in HU, PL, RO and RS No risk reduction expected in MD, RU and UA, thus FDI will hardly increase EU-CEE and parts of WB remain targets of production and services outsourcing despite rising wages and occasional labour shortages room for productivity improvement
12 WIIW FDI REPORT 217: FDI in Central, East and Southeast Europe: Recovery amid Stabilising Economic Growth 149 pages including 14 Tables and 9 Figures, analysis and methodological explanations hardcopy: EUR 7 (PDF: EUR 65) Order via wiiw s website www.wiiw.ac.at, per e-mail koehrl@wiiw.ac.at Online access to the wiiw FDI Database via https://data.wiiw.ac.at Annual fee: EUR 16
13 Country codes AL Albania MK Macedonia BA Bosnia and Herzegovina PL Poland BG Bulgaria RO Romania CZ Czech Republic RS Serbia EE Estonia RU Russia HR Croatia SI Slovenia HU Hungary SK Slovakia KZ Kazakhstan TR Turkey LT Lithuania UA Ukraine LV Latvia XK Kosovo ME Montenegro CESEE CIS EU-CEE WB Central, East and Southeast Europe Commonwealth of Independent States European Union Central and Eastern Europe Western Balkans