Foreign investments reached a record, but "greenfield" projects (from zero) sank by 88%

2025-01-06 08:12:00, Ekonomi CNA

Foreign investments reached a record, but "greenfield" projects (from

In numbers, Albania is experiencing its best days in terms of Foreign Direct Investment (FDI). The Bank of Albania has reported that in 2023, FDI reached the value of 1.49 billion euros, an increase of 8.7% compared to the previous year, marking the highest historical level ever recorded.

Despite the high value, the real impact on the economy seems to have been low, as for the most part this value represents the purchase of real estate, capital increase of financial companies, mainly banks, or the opening of new oil wells. Real investments, with added value in the economy and employment, are missing.

The latest report of the Vienna Institute for Economic Studies estimates that there is a marked decline in foreign direct investment throughout Eastern Europe, but in Albania the decline is especially evident in those investments that start from scratch where companies move their operations to another country or qualified under the phrase "greenfield investment".

Investments of this nature generally involve large companies that benefit from economies of scale and have targeted operations in different countries, therefore with an extended effect on the local economies where they are located, such as in production, employment, research or marketing.

"Among EU member states, Bulgaria, Poland and Estonia have seen the biggest cuts, where these commitments are halved. In Albania, which is still experiencing a boom due to tourism, the number of "Greenfield" investment projects has fallen by 88%," says the Institute's announcement of its latest report on investments in the region.

Report for the region

From the outset, this announcement seems to make clear a more conservative behavior of investors towards some regions, a conclusion that is based on the processed figures of each country.

"International investors are increasingly turning their backs on central, eastern and southeastern Europe. This is the conclusion of a new report by the Vienna Institute for International Economic Studies (wiiw) on Foreign Direct Investments (FDI) made or promised in the region.

The Institute estimates that in the first three quarters of this year, the number of Greenfield investment projects announced decreased by 44%, compared to the same period last year. Although the amount undertaken for Direct Investment shrank less, it still fell by 39%. The number of investment projects announced in the EU member states of the region and the six Western Balkan states also fell by over 40%, compared to the previous year.

"The crisis in German industry and geopolitical uncertainties are already having their full impact on the region", explains Olga Pindyuk, economist at WIIW and author of the report./ Monitor magazine