Despite the severe economic crisis Greece has been facing over almost a decade, the country’s performance in dragging in foreign investment throughout the years has been marking a rather impressive track record. So far, 2017 has beendefinitely a year showcasing increased economic, commercial and corporate activity and gradually improving financial circumstances.
The Greek Ministry of Finance issued in late October a monthly bulletin on the year’s national financial and economic developments, pointing out, inter alia, that all economic indicators confirm an upward economic outlookand advocate for an increase in competitiveness and commercial activity. Same report sharesthe optimistic view that foreign direct investments (FDI) are expected to surpass Euro 4 billion in total until the end of the year “based on the seven-month period performance and the overall performance of FDI in previous years”, drifting at the same time the GDP growth towards meeting the annual target of 1.8%.
The rebound in foreign direct investment is welcome news for Greece, which is struggling to boost growth and fend off investors fears of market volatility and financial insecurity. The completion of the latest EU programme review in early December certified a buoyed business confidence index, a slightly increased manufacturing purchasing managers index (PMI) compared to the previous trimester and a steadily increasing private productive investments rate. At the same time, the feeling that it is about time EU leaves the Greek crisis saga behind comes in high intensity for both the EU governments and Greece, which wishes to keep providing the Eurozone with comfort as regards its economic future.
Latest available data sourced from the Bank of Greece evidence that Greece continues to receive most of its FDI flows from other EU member states, including Germany, Luxembourg, the Netherlands, France and Switzerland in its top-5 list, whereas theUSA and Canada are also among the top ten source countries of foreign investment in Greece during the last decade, increasing significantly their investment presence during the last few years.
In terms of the main invested sectors, records show that foreign investors feel safer investing in areas such as real estate, manufacturing, trade, information and telecommunications, banking and finance, as well as energy and oil and gas.
Despite ongoing economic uncertainty throughout the years, Greece has surprisingly managed to maintain a satisfactory position on the FDI map – with the exception of last year, which secured only a few foreign investment deals for the country.Greece’s talent to drag in foreign investors even through direst times is mainly due to a series of traits attributing to Greece a competitive advantage compared to the remaining Euromed region.
Greece is a highly strategic country, geographically positioned at the crossroads of Europe, Asia and Africa. As a member of the EU and the Eurozone, Greece provides investors with access to high-growth and emerging regional markets, being highly competitive in terms of trade, infrastructure and human resources.On top of that, Greece is privileged with providing foreign investors with three sectors they are longing for: commercial real estate, shipping and tourism. Long-term projections indicate strong prospects for tourism, multiple opportunities related to upgrading or updating infrastructure and a renewed interest in commercial real estate, mostly related to yield investments and especially in quality real estate with prime tenants. On the same note, Greek shipping is one of the strongest sectors in the world and comes right after tourism in terms of economic constribution, generating high demand for maritime transportation products and services.
Having secured that FDI inward flow is on steady track, the Greek government is planning to implement a series of measures in order to motivate and launch foreign productive investments in Greece. To this direction, the Greek Minsitry of Economy has announced that negotiations are well underway with respect to the EU funding of the Infrastructure Fund, which will be managed by the EIB and will focus on promoting PPPs in order to tackle lack of liquidity and providing the necessary mentoring/coaching that will create a healthy environment for boosting entrepreneurship. It remains to be seen in due course whether the aforementioned proposed approach, protection schemes and investment mechanisms will manage to attract long term FDI and completely restore the trust of investorswishing to contribute their money in Greece.
Panagiotis Drakopoulos, Senior Partner
Mariliza Kyparissi, Senior Associate Greece