Greece historically underperforms in FDI compared with southern or eastern European countries. Between 2003 and June 2018, there have been 2710 greenfield FDI projects into Romania, 1834 into the Czech Republic, 1270 into Bulgaria and 396 into Greece, according to fDi Markets, a service from the Financial Times.
In terms of job creation from FDI during the same time, Greece ranks 18th out of 24 countries in south-east, central and eastern Europe. This disparity predates the Greek financial crisis that began in 2010, according to fDi Markets data.
Nonetheless, things are changing. The past three years have witnessed a positive trend for inbound foreign investment to Greece, not least thanks to the government’s successful privatisation programme. In 2016, FDI saw a 78% rise compared with 2014, while 2017 saw a 28% year-on-year increase, marking a 10-year high.
Proportionally speaking, however, “FDI still lacks substance in terms of value and new positions created, [despite the] percentage increase. Compared with neighbouring countries, our FDI is [not so impressive],” says Panos Papazoglou, managing director of EY in Greece.
In an interview in mid-2017, mayor of Thessaloniki Yiannis Boutaris criticised Greece’s long-term hostility towards profit-making. “All we change is the prime minister. The municipal system, the tax system, the education system – they need to change,” he told Greek Reporter.
However, there is hope among investors that 2019’s national elections will see the liberal ‘pro-business’ party New Democracy come to power. It could make more substantial changes and, more importantly, impart business confidence and predictability to a country that is blessed by its strategic location, well-educated workforce, and many other business advantages.
Even Syriza, the current leftist party that almost activated ‘Grexit’, now promotes an investor-friendly agenda.
Indeed, Greece’s deputy minister of economy and development, Stergios Pitsiorlas, said: “Greece was never an investment-friendly country, even in years of economic prosperity [before the crisis]. This has now changed through the [bailout] adjustment process, [where] Greece has, and is, implementing a lot of structural reforms. The Greek government is determined to follow all the necessary steps to make our country more attractive to investors.”
Macroeconomic stability has also returned. After seeing its GDP fall by almost a third since 2008, Greece’s economy is rising once more. GDP was up by 1.4% in 2017, and rose 2.3% in the first quarter of 2018, its best growth in 10 years.