Foreign investors invested 1.24 billion euros in Croatia last year, the highest since 2014!

According to HNB data, the total amount of foreign direct investments in Croatia last year was 1.24 billion euros. Compared to the same period a year earlier, the value of foreign direct investments increased by 196 million euros or 18.9 percent. This is also the highest annual level of foreign direct investments since 2014. Looking at the statistics of foreign investments by country, the highest direct investments (286 million euros) last year came from Luxembourg. This was followed by investments from Austria amounting to 257 million euros, and Slovenia and Germany (140.8 and 135 million euros, respectively). A significant net outflow in 2019 was recorded with Switzerland (157.8 million euros), according to the latest analysis by Raiffeisen Bank analysts. 

According to revised data, from 1993 (when statistics on foreign direct investments became available) until the end of 2019, Croatia recorded 31.8 billion euros in foreign direct investments. Excluding so-called round-trip investments (which have the effect of increasing direct investments in both directions, i.e., into the Republic of Croatia and abroad), this amount is lower and stands at 29.4 billion euros.

During the observed cumulative period, the largest values of foreign direct investments in Croatia originated from the financial intermediation sector (over 22%) and from investments in the wholesale trade sector, excluding the trade of motor vehicles and motorcycles (9.3%) and real estate business (6.9%), while significant investments in the sector of tradable goods were absent. On an annual basis, compared to 2018, direct ownership investments in real estate and in the manufacturing industry, particularly the automotive sector and food production activities, have increased more significantly, according to RBA analysts. 

—

—

The important role of foreign direct investments in the growth and development of the host country has been confirmed by numerous empirical studies, reflected in faster growth of income and capital in companies with acquired FDI compared to other domestic companies, and productivity also grows faster in such enterprises.

On the other hand, a major problem that Croatia continues to face, which complicates the arrival of foreign direct investments, is the unfavorable business climate. Namely, according to the latest report on global competitiveness, „Global Competitiveness Report 2019.“ by the World Economic Forum, published at the end of last year by the National Council for Competitiveness, Croatia made the least progress in improving the efficiency of the legal system in resolving disputes, reducing the burden of government regulations, the efficiency of the legal system in challenging regulations, the ease of employing foreign labor,  the propensity for entrepreneurial risks, the government’s focus on the future, finding qualified labor, and hiring and firing workers, according to RBA analysts. 

By abolishing administrative procedures and creating an atmosphere of legal certainty, both the business and investment climate would improve, which would certainly positively affect the growth of foreign direct investments in Croatia.

{embed_digitalno_izdanje}{/embed_digitalno_izdanje}.