Direct Foreign Investment in Croatia in the First Half of the Year Down 45 Percent

The total amount of direct foreign investment in Croatia in the first half of 2015 was, according to the latest data from the Croatian National Bank, 498 million euros, which is 45 percent lower than in the same period last year, analysts from Raiffeisenbank Austria (RBA) report.

Namely, according to balance of payments data, in the first six months of last year, direct foreign investments amounted to 2.4 billion euros, but nearly 1.5 billion euros of that relates to the so-called circular investment recorded in June 2014. Excluding the effect of that circular investment, the amount of direct foreign investments in the first half of last year was at the level of 928.8 million euros, which is about 430 million euros more than in the first half of this year, HNB data shows. 

Additionally, preliminary data from the HNB also shows that in the first six months of this year, the largest portion of foreign investments came from ownership investments in real estate and real estate business, with a combined share of 24.1 percent of total investments, followed by investments in the wholesale and retail trade sector (share of 23.1 percent), in the production of chemicals and chemical products (17.8 percent), and in financial intermediation (10 percent). Observing by countries, in the first half of the year, the most direct investments came from Luxembourg, accounting for more than 60 percent, followed by Germany and the Netherlands.

From 1993, when statistics on direct foreign investments began to be tracked, until the end of June 2015, direct foreign investments in Croatia reached 29.9 billion euros. However, analysts from RBA emphasize in their analysis published on Wednesday that when excluding the effect of circular investments, this amount is lower and stands at 27.5 billion euros. 

– To more strongly encourage foreign investments, especially in the sector of tradable goods, it is necessary to work more decisively on improving the business climate. After all, the results of the latest Global Competitiveness Report warn of this, as its research showed that, according to the perception of entrepreneurs, the most problematic factors for doing business in Croatia are the inefficiency of public administration, political instability, tax rates, access to financing, restrictive labor legislation, complexity of tax legislation, inadequately educated workforce, and corruption, conclude RBA.