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Foreign investments, we stand in the middle of the regional ranking. Real estate new inflow of FDI

2023-11-28 10:13:12Biznes SHKRUAR NGA REDAKSIA VOX

Foreign investments, we stand in the middle of the regional ranking. Real estate

Inward Foreign Direct Investments (FDI) in real terms increased last year, but still Albania remains in the middle of the regional ranking in attracting these investments.

According to the comparative data of the World Bank, inflows of foreign investments in Albania last year were as much as 7.6% of the Gross Domestic Product, increasing from the level of 6.8% of the previous year.

With this figure, Albania ranks third in the Western Balkans region, after Montenegro and Kosovo. For the past year, Montenegro absorbed foreign direct investments to the extent of 14.3% of GDP, with a significant difference from other countries in the region.

After Montenegro, Kosovo follows with 8.6% of GDP, followed by Albania with 7.6% of GDP. In comparison with other countries of the Western Balkans, Albania leaves behind North Macedonia, where inflows of Foreign Direct Investment last year constituted 6.4% of GDP, and Bosnia-Herzegovina, with 2.6% of GDP.

Although in absolute value foreign direct investments during the last years have reached record values, their value in relation to GDP is far from the highest historical levels. Based on World Bank data, the highest level of this indicator was reached in 2009, when foreign direct investments accounted for 11.2% of GDP. In the last decade, the highest level was recorded in 2013, with 9.8% of GDP, while the following values ​​have been decreasing. The year 2021 marked the lowest level in the last 15 years, with inward direct investment flows of 6.8% of GDP.

According to data from the Bank of Albania, last year foreign direct investments reached the value of 1.37 billion euros, an increase of 33% compared to the previous year and the highest value ever recorded.

The reinvested profit accounted for more than 53% of the total foreign direct investment.

In recent years, reinvested gains in value have dominated new foreign direct investment flows and offset some of the decline in new outward investment flows. Large amounts of reinvested profits are typical especially in sectors such as hydrocarbon extraction or banking and financial services.

High crude oil prices starting in late 2021 and most of 2022 have played a positive role in spurring new investment to increase production volumes.

Even the financial sector and especially the banking sector is generally characterized by the use of a large part of the profits in order to increase the capital, to support the expansion of the bank's activity. But, in recent years, the profits reinvested in the banking sector have increased due to the greater capital requirements imposed by the Bank of Albania.

As for new investment flows, a sector that has seen significant growth in recent years has been real estate.


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