Foreign investments, another record/ Real estate dominates again

2024-06-11 07:17:34, Ekonomi CNA

Foreign direct investments have started with growth this year as well.

According to the data of the Bank of Albania, for the first quarter of the year foreign direct investments reached the value of 354 million euros, the highest historical level for this period of the year. Foreign investments have increased by 15.3% compared to the same period last year.

However, the growth of foreign investments is now clearly dominated by the reinvested profits of enterprises, while new capital injections are almost at a standstill.

According to the Bank of Albania, reinvested profits reached 209 million euros, or 59% of the total flow of foreign direct investments. They increased by 15% compared to the same period a year ago.

Meanwhile, the injection of new capital was worth 144 million euros, with an annual increase of only 1%. The increase in foreign investments in the item of reinvested profits is also related to the strengthening of the lek in the exchange rate.

Given that the profits of enterprises with foreign capital are mainly secured in Lek, while the balance of payments is reported in Euro, the drop in the exchange rate increases the statistical value of the reinvested profits.

Foreign investments, another record/ Real estate dominates again

The strengthening of the lek seems to have created a vicious circle, where the increase in foreign investments explains the appreciation of the local currency, but at the same time, this appreciation also statistically affects the increase in the value of foreign investments.

According to the Bank of Albania, during the first quarter of 2024, incoming foreign exchange flows in the form of foreign direct investments were mainly concentrated in real estate, to the extent of 23%, the financial intermediation sector, to the extent of 21%, and hydrocarbons, to the extent of 13%, energy, to the extent of 5%, as well as communication, to the extent of 5%.

The data of the first quarter of the year confirm, in general terms, the trends of recent years. Foreign direct investments are constantly growing, supported especially by the real estate sector, but also by the high values ??of profits reinvested in some sectors of the economy. This includes especially the sector of the hydrocarbon extraction industry and the financial sector.

According to data from the Bank of Albania, foreign direct investments last year reached 1.49 billion euros, an increase of 8.7% compared to the previous year. Real estate brought in almost 22% of the total value of foreign direct investment for the past year. They reached the value of 325 million euros, increasing by 12% more compared to 2022./ Monitor.al