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Newsletter July 2012


Greece Maintains FDI Inflows

The highly challenging environment in Greece and globally has had severe repercussions in a variety of areas, yet Greece has maintained a satisfactory level of FDI inflows.

Despite the severe economic crisis Greece has been facing since 2010, the country's performance in attracting foreign investment in 2011 was satisfactory in comparison with the previous year. The total (gross) capital inflows to the country in 2011 amounted to 3.3 billion Euros, while net inflows exceeded 1.3 billion Euros.

Total (gross) inflows of foreign investment capital, which reflect the actual performance of the country in attracting investment, increased in 2011 by 20%, despite the intense economic crisis during this year and the negative publicity that Greece faced abroad.

Net inflows of foreign investment capital during the same year increased rapidly, by 366%, which is mainly due to the fact that the losses of foreign companies in Greece for 2010 were included in the calculation of reinvested earnings, recording them in this way as negative.* However, undoubtedly the volume of net FDI inflow in 2011 was at relatively high levels, despite the intense economic crisis, exhibiting in this way stabilising trends.

Total inflows of foreign direct investment in Greece fell in the years 2010 and 2011 compared with the volumes of the period prior to crisis, 2006 - 2008, but nevertheless remain at the same levels of 2003-2005, despite some fluctuations.

In 2011, the ratio of foreign investment oriented in productive categories, founding and increase of share capital (2,583 million Euros) compared with the amounts invested in mergers and acquisitions (881 million Euros) improved significantly.

The inflow of capital in the form of loans, which amounted in 2011 to 1,364 million Euros, indicates the confidence of foreign investors for investment in Greece as well as their willingness to support their companies already established in Greece, and commit funds to the country for future income and growth.

The difference between total and net FDI inflows to Greece in 2011 relates primarily to repayments of loans to parent companies, as well as acquisitions of companies in other countries.

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 completion of the PSI and the anticipated exploitation of public property are expected to reinforce Greece’s investment framework.

Greece’s competitive advantages (geopolitical, climatological, historic characteristics) that enhance investment in many sectors haven’t been affected by the economic crisis, and are to be positively exploited.

For a more detailed examination of Greece’s recent FDI activity, please visit:

* This method, although not generally accepted, is widely adopted by international statistical practices (“Under the current treatment, it is possible for reinvested earnings to be negative in cases where the direct investment enterprise makes an operating loss. Reinvested earnings are then recorded as a negative income payment and disinvestment in the enterprise. There are claims that this makes little sense and creates presentational difficulties. However, the negative income can be seen as offsetting a withdrawal of equity in the enterprise, that is the enterprise takes money from the investors, who in turn take the money out of the enterprise”. Source: IMF committee on balance of payments statistics and OECD workshop on International Investment Statistics, Issue Paper 5A, Reinvested Earnings, May 2004).