Foreign investment in CEE to recover slowly

Published: March 24, 2010

Real estate woes dent 2009 levels, claims report – and there’s no bouncing back.

Foreign direct investment in Central and Eastern Europe will see only a slow upturn during 2010, according to a new report.

The study, by accountancy firm PricewaterhouseCoopers, shows that investment in the region fell to US$77bn during 2009, a drop of 50% compared with the US$155bn recorded in 2008.  The firm’s economists say the woes of the real estate sector – where FDI declined by 71% in last year – are largely to blame.

 “We suggest that FDI inflows will not immediately bounce back to previous highs,” says Yael Selfin, PwC's head of macro consulting. “The bust which followed the long boom will have persistent effects in the region; it could take until 2014 for the region’s FDI inflows to surpass the 2008 level.

”Two important factors to determine the recovery path of FDI flows to the region will be the speed with which investors’ perception of country risk moderates, and how quickly the region’s wages – relative to countries like Germany – start to pick up again.”