Foreign Direct Investment


Overview

Despite the severe economic crisis Greece has been facing since 2010, the country's performance in attracting foreign investment until 2014 was rather satisfactory, but in 2015 the total (gross) investment capital inflows were much fewer, as a result of capital controls and of the general economic and political instability during this year. Net inflows present a negative value during the same year (disinvestment).

Inflows of FDI in Greece during the period 2005-2015 (in million Euros)

   
2015: Provisional Data                      
Source: Bank of Greece 2016


Key features
• Total (gross) inflows of foreign investment capital, which essentially reflect the real performance of the country in attracting investment, decreased by 73% in 2015 in comparison to 2014, reaching approximately 605 million Euros. One of the reasons for this decrease is though that international methodology calculates negative reinvested earnings (losses) of foreign companies operating in Greece as negative invested capital (which is deducted from the gross investment inflows in the country).
• Net inflows of foreign investment capital during the same year decreased in comparison to 2014 and presented a negative value (-261,4 million Euros), thus a disinvestment trend.
• The difference between total and net FDI inflows to Greece in 2015 relates primarily to repayments of loans to parent companies, and secondarily to the capital outflow for mergers and acquisitions abroad from foreign companies operating  in Greece.

Investment capital by country of origin 
Foreign investment activity in the country during the last decade originates mainly from companies of important markets, such as the EU, with Germany being the top source country of investment capital and with France, UK, Netherlands and Cyprus following.  USA and Canada also belong to the top ten investing countries, having increased their investment presence in the country especially during the last few years.

Total FDI inflows by country of origin of capital during the period 2005-2015 (in million Euros)

 

2015: Provisional Data       
Total value: 38.602,7 million Euros
Source: Bank of Greece 2016

Key features
• Investment activity in Greece originates primarily from companies from important markets such as the EU.
• Germany is the top source country of investment capital during this period (2005-2015), by far from France that follows, mainly due to the investment of Deutsche Telecom in OTE, while French investment presence focused at the acquisition of Greek banks from French ones during the period before the beginning of the debt crisis.
• USA and Canada also belong to the top ten source countries of foreign investment in Greece during the last decade, increasing significantly their investment presence during the last few years. It is important to note that in 2015 Canada was by far the top source investment country for Greece, with total (gross) FDI inflows of 506,2 million Euros.

Sectoral breakdown of foreign investment
FDI inflows by sector of economic activity in Greece in recent years 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 2005-2015

                                                                                                                                                     

2015: Provisional Data                      
Total value: 38.602,7 million Euros
Source: Bank of Greece 2016

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, mainly before the beginning of the crisis, while during the last years there is a focus of investment in real estate and other business activities.
• The proportion of the secondary sector is relatively low compared to the potential of the country, a trend that suggests considerable scope for investment. That is also the case for the primary sector, with almost zero rates, in a country with a lot of comparative advantages in this sector (climate etc).

Specifically:
A. Manufacturing
Manufacturing sectors with significant investor interest over the period of  2005-2015 include chemicals (by far), food & beverage and machinery.

Structure of total FDI inflows in manufacturing in the period 2005-2015

 

Total Value: 6.709,1 million Euros
2015: Provisional Data  
Source: Bank of Greece 2016


Key features
• The sector of manufacturing that attracted mostly the investment activity during the period 2005-2015 was chemicals (by far, at a rate of 55%). Taking into account that the chemical sector for this analysis does not include plastic products and refinery, this investment interest can be attributed to the development of the pharmaceutical sector in Greece during the last decade.
• After chemicals, the sectors attracting the most important FDI inflows in manufacturing are food products, machinery and metal products, and, to a lesser extent, plastic products and motor vehicles.
• 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.

B. Services
Service sectors with significant investor interest over the period 2005-2015 include telecommunications, financial services, real estate and trade.

Structure of total FDI inflows in services during the period 2005-2015

  

2015: Provisional Data                     
Total value: 28.655,1 million Euros
Source: Bank of Greece 2016

Key features
• The telecommunications and financial institutions sectors account for the overwhelming majority of investment funds directed to the services sector, in particular during the period before the beginning of the debt crisis, with the acquisitions of Greek banks by French ones and the Greek Telecom (OTE) by Deutsche Telecom. However, during the last few years there is a significant increase in investment in the real estate sector, a fact that can be attributed to the great drop of prices in real estate due to the crisis that created investment opportunities in that sector.
• There is considerable scope for further increase of foreign investment activity in the tourism sector, which remains relatively low despite of the development of that sector in recent years.