Foreign direct investment (FDI) in Bulgaria rose by 13 per cent last year, reaching 1.48 billion euro, a report by the United Nations Conference on Trade and Development (UNCTAD), presented by Invest Bulgaria agency, showed.
The annual World Investment Report published by UNCTAD looks at FDI trends globally, regionally and at country level to ascertain the contribution of FDI to economic development. The 2013 report focused on global value chains and their role in development, as the nexus between trade and investment.
The report said that global FDI flows in 2012 fell below pre-crisis level due mainly to economic fragility and policy uncertainty for investors. On an annual basis, global FDI flows fell by 18 per cent; in developed countries, the decline was even steeper at 32 per cent (as an EU member state, Bulgaria is included among developed countries in the UNCTAD report).
Bulgaria, meanwhile, recorded a second straight year of higher FDI flows, largely due to investment in the services sector, where FDI increased on an annual basis by 125 per cent, offsetting a decline in the mining sector, where FDI fell by 30 per cent, and manufacturing, down 38 per cent.
Nevertheless, some parts of the manufacturing sector did well in 2012, such as the automotive industry, with several companies opening new car parts production facilities in Bulgaria, while others expanding existing investments, the head of Invest Bulgaria, Borislav Stefanov, told Bulgarian National Television.
In relative terms, per capita FDI in Bulgaria in 2012 remained higher than in neighbouring countries like Turkey, Romania and Serbia, but far below the heady heights of the pre-crisis years – in 2006-2008, per capita annual FDI in Bulgaria outperformed the figure in developed economies as a whole, according to UNCTAD data.
In terms of country of origin, the most FDI flows into Bulgaria came from Luxembourg (382 million euro), Russia (225 million euro), Switzerland (212 million euro), Germany (177 million euro) and the Netherlands (168 million euro). Put together, FDI flows from those five countries accounted for 78 per cent of total inflows into Bulgaria.
Globally, UNCTAD sees FDI this year relatively close to 2012, with its most optimistic scenario envisioning $1.45 trillion in FDI flows, compared to $1.35 trillion last year. The FDI flows are expected to recover further in 2014 and 2015, when they could reach $1.6 trillion and $1.8 trillion, respectively.
However, on the downside, the report warns that factors such as structural weaknesses in the global financial system, the possible deterioration of the macroeconomic environment, and significant policy uncertainty in areas crucial for investor confidence might lead to a further decline in FDI flows.
(Invest Bulgaria director Borislav Stefanov)