Decline in 2008 To Follow Uneven FDI Growth in 2007 in Central, East and Southeast Europe - WIIW

July 1 (SeeNews) - Foreign direct investments in Central, East and Southeast Europe will decline in 2008 after uneven growth in 2007, the Vienna Institute for International Economic Studies (WIIW) said.

"After continuous expansion from 2004 through 2007, FDI inflows to Central, East and Southeast Europe (CEEC) will face a setback in 2008 in all parts of the region," WIIW said in a statement, posted on its website.

"Not only are FDI the basis for hundreds of thousands of new jobs, they also brought valuable know-how to the countries of the region," Raiffeisen Zentralbank Österreich AG's deputy CEO Herbert Stepic said in the same statement.

It added that the countries that acceded to the EU in 2004 are losing steam. Here privatisation is largely completed, foreign multinationals have finished the takeover of local markets, and also unit labour costs are rising. Additional investments take place primarily within the existing companies by reinvesting profits.

In Bulgaria the upswing resulted mainly from projects in the "real estate and business services" sector. A major problem with this type of FDI, however, is that it will not generate exports which would be necessary to correct the soaring foreign trade deficits, the statement said.

Southeast Europe continued to receive increasing amounts of FDI in 2007,+13%, but at a lower pace than previously. The privatisation-related peaks of 2006 were corrected downwards in Macedonia and Serbia. By contrast, Bosnia and Herzegovina, Croatia and Montenegro benefited from remarkable increases continuing the trend of the past few years. These were often privatisation deals causing one-time large inflows such as in the Bosnian telecom or the Croatian pharmaceutical sector.

Following is an overview of FDI in Southeast Europe (FDI inflow in million euro):

(1 euro=1.95583 Bulgarian levs)