Western Europe has welcomed a significant rise in FDI projects originating from Japan between 2013 and 17, according to cross-border investment monitor fDi Markets

In 2013, Japan announced 134 projects in western Europe. From this point, Japanese FDI into western Europe shows a rapid rise across project numbers, capital investment and job creation. FDI into Western Europe from Japan grew by 22% in 2014 and continued to climb, with a 6% increase in 2015 and by 17% in 2016. During this period, Japan’s capital investment into Western Europe peaked at $5.9bn in 2015, with the number of FDI projects peaking in 2017 at 211.

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The majority of Japanese FDI projects flowed into Germany, the UK, France, Spain and Belgium. Germany was the leading destination country, accounting for 27% of all FDI projects from Japan between 2013 and 2017. FDI into Germany across this period resulted in the creation of 7280 jobs and $2.73bn in capital investment. The UK received the highest number of total jobs and greatest investment, with a total of 16,703 jobs and $9.28bn investment.

The leading industry sector for FDI projects between 2013 and 2017 was industrial machinery, equipment and tools, which dominated with a 14.65% share of the market. Project volume in this sector peaked during 2016, with 32 projects tracked.

Looking ahead, Japanese FDI into Western Europe is set to be bolstered by a new free trade agreement between Japan and the EU. With a free trade agreement in the pipeline since 2013, it appears that the talk of an accord between Japan and the EU has created an FDI-friendly environment.

The influx in projects from Japan into Western Europe can be linked to the progress of the free trade agreement between Japan and the EU, which may make Western Europe an increasingly attractive investment destination for Japanese investors.