Wiener Institut für The Vienna Institute for www.wiiw.ac.at Internationale International Economic Wirtschaftsvergleiche Studies wiiw FDI Report 2017 FDI in Central, East and Southeast Europe: FDI in Central, East and Southeast Europe: Recovery amid Stabilising Economic Growth Gábor Hunya
2 Main FDI trends in 2016 � Global FDI declined but inflows in CESEE increased - Balance of payments statistics, directional principle against revised 2015 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 2016 � 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 2016 up by 45% against 2015: EU-CEE +23%, Western Balkans -7%, Turkey -30%, CIS-3 and Ukraine +54%, Russia +219% EU-CEE Western Balkans Turkey CIS-3 + Ukraine Russia 45000 40000 35000 30000 EUR million 25000 20000 15000 10000 5000 0 2010 2011 2012 2013 2014 2015 2016 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, 2014-2016 RU 2014: 22,037, 2016: 34,012 2014 2015 2016 16000 14000 12000 10000 EUR million 8000 6000 4000 2000 0 BG HR CZ EE HU LV LT PL RO SK SI AL BA XK MK ME RS TR BY KZ MD RU UA LT 2014: -18; 2016: -188. SK 2014: - 386; 2015: -176; 2016: -267. Source: wiiw FDI Database.
5 FDI inflow increased in comparison with total investment FDI inflows in % of GFCF, 2008-2016 EU-CEE Western Balkans + Turkey CIS-4 + Ukraine 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: wiiw FDI Database and wiiw Annual Database.
6 EU transfers declined, role of FDI increased in investment financing in 2016 Transfers on capital account, FDI net, and FDI liabilities in % of GFCF 35 Hungary 25 Transfers FDI net FDI liability 15 5 Czech Republic 20 -5 15 -15 10 10 -25 -25 5 -35 -45 0 -55 -5 -65 -10 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 20 15 Poland Romania 15 10 10 5 5 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 Source: wiiw Annual Database.
7 More greenfield projectes and higher capital investment Greenfield FDI projects 2013-2016: number of projects, announced capital investment in EUR million and number of jobs to be created Number of projects (right scale) Investment Job creation 300000 1500 250000 200000 1000 150000 100000 500 50000 0 0 2013 2014 2015 2016 Source: http://www.fdimarkets.com.
8 Differences in specialisation in manufacturing or services Share of main activities in the number of greenfield projects, in %, 2016 Services Electricity Construction Logistics, Distribution & Transportation Sales, Marketing & Support Manufacturing 100% 80% 60% 40% 20% 0% 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 %, 2016 100% 80% 60% 40% 20% 0% BG HR CZ EE HU LV LT PL RO SK SI RS TR RU Remark: Excluding mining and recycling. Source: http://www.fdimarkets.com.
9 Rank 1 for the Netherlands on account of tax optimisation; stable rank 3 for Austria with about 7.3% of the stocks Inward FDI stock in EU-CEE and Western Balkans by major home countries, in %, 2010 and 2015 Austria 4.5 5.8 7.3 11.1 11.2 France 3.9 1.6 3.8 Germany 6.1 7.2 9.2 Luxembourg 8.0 EU-CEE Netherlands 13.3 13.4 other EU-15 other EU-15 EU-CEE 20.4 19.2 7.3 6.0 United States Cyprus+Russia 20.2 20.5 other countries Austria 12.5 15.7 13.4 Germany 20.1 2.2 Greece 2.3 4.6 Netherlands 12.4 6.2 2.7 Western Russia 6.9 1.7 1.2 other EU-15 Balkans 0.8 8.7 15.9 EU-CEE United States 18.2 18.9 Cyprus+Russia 19.3 16.3 other countries Source: wiiw FDI Database.
10 Austrian greenfield projects in CESEE – modest recovery, but still only rank 8 or 9 in the region Number of projects in CESEE Share in total number 140 Investment in CESEE, EUR billion Share in total investment 120 100 80 60 40 20 0 2010 2011 2012 2013 2014 2015 2016 Source: http://www.fdimarkets.com.
11 Outlook for 2017 � 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 2017: FDI in Central, East and Southeast Europe: Recovery amid Stabilising Economic Growth � 149 pages including 104 Tables and 9 Figures, analysis and methodological explanations � hardcopy: EUR 70 (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 160
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 HU Hungary Hungary SK SK Slovakia Slovakia KZ Kazakhstan TR Turkey LT Lithuania UA Ukraine LV Latvia XK Kosovo ME Montenegro CESEE Central, East and Southeast Europe CIS Commonwealth of Independent States EU-CEE European Union – Central and Eastern Europe WB Western Balkans
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