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June 9, 2017 www.intellinews.com I Page 10
FDI to Emerging Europe soars in 2016
Inflows of foreign direct investment (FDI) to Emerging Europe soared by 45% y/y in 2016, with the recovery driven by Russia and the EU member states of Central Europe.
A new report from the Vienna Institute for In- ternational Economic Studies (wiiw) shows that FDI recovered by 23% in Central Europe, while it expanded at an outstanding rate of almost 150% in the Commonwealth of Independent States (CIS-4) and Ukraine, with Russia in particular seeing a sharp upturn in investment.
The stars of what wiiw terms the Central, East and Southeast Europe (CESEE) region were
the Czech Republic and Hungary. In the Czech Republic real estate investments predominated. 2016 saw the largest ever real estate deal in
the Czech Republic, with the sale of P3 Logistic Parks to Singaporean sovereign wealth fund GIC. The €2.4bn transaction was the largest on the European real estate market last year.
Meanwhile, Hungary saw more manufacturing sector investments, especially in the automotive and auto components sectors. This increase in FDI came despite an overall decline in investment in the country reported by the local statistics office.
“Both [the Czech Republic and Hungary] received amounts that were the second largest since 2008, surpassing the 2015 slump by a wide margin,” the report noted, also pointing to higher FDI inflows in Romania, Croatia and Estonia.
Russia was another standout performer, with FDI veering sharply upward during the year, albeit to a large extent influenced by the murky sale of a 19.5% stake in oil major Rosneft for €10.2bn – one third of total inflows – to oil trader Glencore and the Qatar sovereign wealth fund announced in December.
Aside from the Rosneft deal, however, the recovery in Russian FDI was also a product
of more positive economic trends. “The decline of the economy levelled out and more FDI was attracted by reduced import competition into sectors affected by the sanctions (mainly food production),” the report said.
FDI also edged upward in Ukraine, although wiiw pointed out that, “The elevated investment risk is reflected in the low FDI inflow compared with the size of the country.”