UN: Beginning of 2010 brought a slight recovery in global investments following two-year decline

Last year the Czech Republic attracted foreign direct investments totalling nearly CZK 52 billion, making it the 57th most successful country in terms of investment volume. In comparison with 2008, foreign investments in the Czech Republic declined by 42%. However, this result is two percent better in comparison with other economically developed countries. Conversely, Czech firms invested CZK 25.5 billion abroad, making them the 47th most active investors. This is according to the World Investment Report 2009 published today by the United Nations Conference on Trade and Development (UNCTAD).

“Foreign direct investment declined by 16% worldwide in 2008 and by 37% last year,” says Alexandra Rudyšarová, acting CEO of CzechInvest, citing the report’s conclusions. “According to UNCTAD, this year should bring a very cautious change for the better following two years of decline. The stable results confirm CzechInvest’s preliminary statistics for the first half of this year, according to which we assisted 140 projects up to June last year; in the same period this year that figure was 125.”

The Czech Republic performed very well in comparison with the Visegrad Four countries, its strongest competitors in the area of attracting foreign direct investments. According to UNCTAD, Hungary finished in last place (206th) in the ranking of the world’s most successful countries, whereas Slovakia ranked only four places higher. Conversely, Poland ranked 27th.

The total volume of foreign direct investment reached USD 1.1 trillion in 2009, i.e. half the amount in 2007. This year is expected to bring a slight recovery. UNCTAD predicts that investments will reach USD 1.2 trillion. The total investment volume should reach 1.3 to 1.5 trillion in 2011, and possibly return to pre-crisis levels in 2012, when UNCTAD anticipates the investment volume will possibly reach USD 2 trillion. “However, these forecasts are burdened with risks and uncertainty, including dangers ensuing from the very fragile recovery of the global economy,” the report warns.

Direct investments declined last year in all sectors of the economy – services, manufacturing and the primary sector. Even previously impervious investments in the pharmaceutical and food industries declined in 2009. Investments in electricity, gas and water distribution, construction and electronics were an exception, having actually increased in 2009.

Zentiva among the world’s biggest transactions

Despite the overall decline in investments, the Czech Republic appeared on the list of the 108 biggest global mergers and acquisitions of 2009 with the decision of the French pharmaceutical company Sanofi-Aventis to take over the Czech firm Zentiva. According to UNCTAD, the deal worth USD 2 billion ranked 50th among the world’s biggest mergers and acquisitions last year.

This year’s report on global investments was thematically focused on investments involving projects with low CO₂ emissions. In the energy sector, UNCTAD mentioned, for example, the project of the Czech company ČEZ involving the construction of an enormous wind-power plant in Romania in the value of more than USD 1.6 billion.

Recovery from the east

According to UNCTAD, the cautious recovery of the global economy is currently being driven primarily by developing and transition economies. For the first time in history, these economies attracted nearly 50% of foreign direct investments worldwide. Even though these countries were affected by the drop in foreign direct investments following six years of uninterrupted growth, the 27% decline was substantially lower than in developed economies. The six biggest recipients of foreign investments include three in the category of developing and transition economies – China, Hong Kong and Russia.

The United States remains at the top in terms of investments abroad, followed by France, Germany and Japan. The next three places in this ranking are occupied by Hong Kong, China and Russia. India remained near the top 20 investors, placing 21st. According to UNCTAD, developing and transition economies are increasingly important not only as destinations for foreign investment, but also as sources of investments.

Key: The graph shows the absolute values of FDI inflows.

 The figures above the line indicate the relative ranking of the Czech Republic in comparison with other countries in the given year.

For more information please contact the CzechInvest Press Centre

Jiří Sochor, spokesperson, phone: +420 296 342 538 , jiri.sochor@czechinvest.org