Albania, on the radar of German investors

2025-02-25 07:29:00, Ekonomi CNA

The report "Perspectives of German businesses in Central and Eastern Europe 2025" by KPMG has analyzed the prospects of German investments in Central and Eastern Europe (CEE), emphasizing the region's key countries and sectors with high development potential.

He estimates that the region remains a strategic destination for German businesses, due to competitive labor costs, proximity to the EU market and growing domestic demand. However, challenges such as labor shortages, political instability and delays in institutional reforms continue to be influential factors in attracting investment.

Although German enterprises operating in Albania were also surveyed, our country does not appear as an attractive destination for German investments.

Serbia and Croatia are among the countries of most interest to German investors in the Western Balkans. Serbia has recorded the largest increase in German investment in the last decade, while Croatia benefits from EU membership and economic stability.

Other Balkan countries, such as Bosnia and Herzegovina, Montenegro, North Macedonia and Kosovo, are mentioned as emerging markets, but with greater institutional and economic challenges. Albania is also included in the overall analysis, but does not figure among the top destinations for German investment.

The report highlights that the manufacturing, technology and renewable energy sectors are increasingly attracting investment in the region. As CEE economies continue to integrate more deeply with the European Union, foreign investment is expected to increase, especially in those countries that manage to improve political stability and economic infrastructure.

In conclusion, the report concludes that the region remains one of the most important for German business expansion, but long-term success will depend on the ability of governments to offer better conditions for investors.

According to the report, German investment in Central and Eastern Europe (CEE) has continued to grow significantly over the past decade. In 2022, the net stock of German direct and indirect investment in the region reached 134.7 billion euros, making CEE a key destination for German capital.

At the national level, Poland is the top destination for German investment, with 44.1 billion euros of direct investment, while Kosovo has the lowest level with only 144 million euros. Meanwhile, Serbia recorded the largest percentage increase in German investment between 2010 and 2022, with an increase of 176%, compared to the region's average growth of 62%.

Trade between Germany and the CEE region continues to be important. The total bilateral trade volume is expected to reach 519 billion euros in 2024, exceeding Germany's combined trade with the US and China (504 billion euros).

For the Western Balkan countries, Serbia and Croatia are among the most important destinations for German investment, with a strong presence in the manufacturing, energy and logistics sectors. Investments in North Macedonia, Bosnia and Herzegovina, Montenegro and Albania remain more limited, but are gradually increasing as part of the diversification of supply chains.

Serbia is the Western Balkan country that has attracted the most German investment in the last decade. According to the report, Serbia has recorded the highest percentage increase in German direct investment, with an increase of 176% between 2010 and 2022. This high interest, according to the report, comes thanks to competitive labor costs, strategic position and facilities for foreign investors.

Serbia is the sixth destination for German investments in CEE, after Poland, Hungary, Ukraine, Hungary, the Czech Republic, while Bosnia and Herzegovina is in tenth place.

Albania, few German investments

Other data from the Bank of Albania indicate that the stock of German investments in Albania is 464 million euros, which represents the inflow of German capital after the 1990s. Germany ranks as the ninth largest investor in Albania, after the Netherlands, Switzerland, Canada, Italy, Turkey, Bulgaria, Austria and France.

Sectors where Germany is interested in investing in CEE

Overall, the report confirms that CEE remains a priority region for German investment, with a particular focus on manufacturing, technology and renewable energy.

Industrial manufacturing and machinery – This sector remains one of the most important for German investment, with a strong presence in CEE countries, especially in Poland, the Czech Republic, Hungary and Serbia.

Automotive – The automotive industry is another key area of ??investment, with Germany having factories and supply chains in several CEE countries, including Hungary, Slovakia and Serbia.

Renewable energy – Germany is expanding investments in clean energy, especially in wind and solar projects in the region, aiming to harness the potential of CEE countries to reduce dependence on imported energy.

Information technology and telecommunications – With a significant increase in IT centers in the region, especially in Poland, the Czech Republic and Romania, investments in this sector are on the rise, with German companies looking to take advantage of specialized talent and low costs.

Transport and logistics – The strategic position of the CEE countries makes this sector an important point for German investments, with Poland and Hungary as the main hubs of European supply chains.

Agribusiness and food processing – Germany has major interests in the food and agricultural industry in the region, investing in agricultural product processing and food exports./ Monitor Magazine