Foreign Direct Investment

Overview
Despite the severe economic crisis Greece has been facing since 2010, the country's performance in attracting foreign investment in 2014 was rather satisfactory. Total (gross) capital inflows to the country in 2014 amounted to 2,6  billion Euro, while net inflows reached 1,6 billion Euro.

Inflows of FDI in Greece during the period 2004-2014 (in million Euro)
fdi1_EN
   
2013: Revised Data                       2014: Provisional Data
Source: Bank of Greece 2015


Key features
• Total (gross) inflows of foreign investment capital, which essentially reflect the real performance of the country in attracting investment, decreased by 24,4% in 2014 in comparison with 2013 , but are still higher by 30.7% in comparison to 2012.
• Net inflows of foreign investment capital during the same year decreased in comparison to 2013, by 22.9%, however in comparison to 2012 they remain increased by 20,9%.
• The difference between total and net FDI inflows to Greece in 2014 relates primarily to repayments of loans to parent companies, and secondary to the capital outflow for mergers and acquisitions abroad from foreign companies that do business in Greece.
• The rapid promotion of reforms and the reduction of costs of production factors, which was the result of the economic crisis in the country, create significant investment opportunities. The anticipated commercial development of public property and natural resources (oil, gas) is expected to reinforce Greece’s investment framework.
• Greece’s comparative advantages (geopolitical, climatological, historical) that enhance investment in many sectors have not been affected by the economic crisis, and are to be positively developed.


Investment capital by country of origin
Countries with a strong investment presence in Greece in recent years include 'traditional' capital exporting countries such as Germany, France, the United Kingdom, Luxembourg and the Netherlands, while the presence of Cyprus, USA  and Switzerland is important as well.

Total FDI inflows by country of origin of capital during the period 2003-2014 (in million Euro)

Period 2003-2008

fdi2_EN

Total value:  28.405,7 million Euro
Source: Bank of Greece 2015
 

Period 2009-2014

fdi3_en
Total value: 17.393,8 million Euro

Source: Bank of Greece 2015


Key features
• Investment activity in Greece originates primarily from companies from important markets such as the EU.
• There is a clear shift in the main countries investing in Greece over the two periods examined above.Germany remains the largest source of FDI to Greece during both the period of 2003-2008,and the period of 2009-2014. During the first period the United Kingdom comes second as, and France comes is in the third place, although there is a significant difference percentage with Germany (mainly due to the investment of Deutsche Telecom in OTE). During the second period though, France comes in second place, with a small difference from Germany that remains first.The USA come third (having considerably increased their investments in comparison with the previous period) and the UK, Cyprus and Switzerland follow. Throughout the second period, the total amount of FDI inflows is considerably lower than that of 2003-2008 (reduced by 38.8%) due to the economic crisis in Greece.
• Promising prospects exist in the near future in attracting FDI from Russia and Eastern Europe, the Middle East, other Arab countries and Asia, particularly China, that are mainly interested in the energy, telecommunications, tourism, transport and logistics sectors.

Sectoral breakdown of foreign investment
FDI inflows by sector of economic activity in Greece in recent years (in both the 2003-2008 and the 2009-2014 terms) focused primarily in the tertiary sector, followed, with a significant margin, by the secondary sector. The majority of developed countries shows a similar structure of FDI.

Total FDI inflows by sector of economic activity for the period 2003-2014

Period 2003-2008
                                                                                                                                                              
fdi4_en

Total value: 28.405,7 million Euro
Source: Bank of Greece 2015


Period 2009-2014
FDI5_en
Total value: 17.393,8 million Euro
Source: Bank of Greece 2015


Key features
• Focus of FDI in services. This trend was dictated primarily by the development of the country's financial system, the liberalisation of telecommunications, and the stimulation of trade.
• The proportion of the secondary sector is relatively low compared to  the potential of the country, a trend that suggests considerable scope for investment.
During the second period which is under examination (2009-2014), the percentage of the secondary sector was increased from 27% to 31%, hence, the economic crisis of the specific period reinforced investments in the secondary sector and decreased those in the services sector. 

Specifically:
A. Manufacturing
Manufacturing sectors with significant investor interest over the periods of both 2003-2008 and 2009-2014 include chemicals, food & beverage, machinery and metal products.

Structure of total FDI inflows in manufacturing in the period 2003-2014

Period 2003-2008

FDI6_en
Total Value: 6.925 million Euro
Source: Bank of Greece 2015


Period 2009-2014


fdi7_en

Total Value: 3.709 million Euro
Source: Bank of Greece 2015


Key features
Compared with the period 2003-2008, in the period 2009-2014 there was a significant increase in the concentration of investment in the chemicals sector, which accounts for 58% of total investments in the manufacturing sector, compared with 26% during the 2003-2008 period. The refinery sector is examined separately (1% during 2009-2014 compared with 9% between 2003-2008), which means that this increase is primarily due to the development of the pharmaceutical sector in Greece in recent years.

The concentration of investment activity in these areas favours the establishment of new businesses (Greenfield Investments) in Greece, as well as the investment cooperation of foreign companies with Greek companies in order to produce end products that meet the needs of domestic and international markets.

Chemicals is the sector that experienced an important increase in 2014 compared with the previous year.


B. Services
Service sectors with significant investor interest over the period 2003-2014 include telecommunications, financial services, trade and tourism.

Structure of total FDI inflows in services during the period 2003-2008

Period 2003-2008

FDI8_en
Total value: 20.059 million Euro
Source: Bank of Greece 2015


Period 2009-2014


fdi9

Total value: 11.848 million Euro
Source: Bank of Greece 2015


Key features
• The telecommunications and financial institutions sectors account for the overwhelming majority of investment funds which was directed to the services sector, both during the period of 2003-2008 and during 2009-2014. However, during the second period there is a significant increase in investment in the real estate sector, which from 7% in the 2003-2008 period skyrocketed to 18% during 2009-2014, fact that can be attributed to the great drop of prices in real estate during the crisis that created investment opportunities in the specific sector.
• There is considerable scope for further development of foreign investment activity in the tourism sector.
• Sectors that showed a significant increase in 2014 compared with the previous year are: telecommunications and tourism (hotels- restaurants).