Foreign Direct Investment. “Poland is one of the main beneficiaries”

Foreign investments in Europe fell for the first time since 2020 – according to the EY study “Investment attractiveness of Europe 2024”. The data presented in the report show that in 2023, 5,694 foreign direct investment (FDI) projects were announced in Europe. This is equivalent to a decrease in their number by 4%. compared to 2022 and by 11%. compared to the level in 2019 – just before the pandemic began in Europe. This result is also lower by as much as 14%. from the record from 2017

FDI, foreign direct investment, is the involvement of enterprises in other countries by establishing a new company or establishing a plant/plants abroad.

At the same time, the report indicates that investment decline may be temporary. “Europe remains an attractive long-term destination despite clear risks on the horizon: increased regulatory burdens, energy prices and supply issues, and political instability in a multi-election year,” the report says.

“Investments in industrial processing, which is key to the inflow of FDI to Europe, turned out to be resistant to turmoil and recorded only a 1% decline across the continent.” – we read in the report.

The authors of the report indicate that FDI in manufacturing accounted for almost half (47%) of the jobs generated as part of direct investments announced in 2023.

– In addition to traditional investment drivers, foreign companies are expanding operations in Europe to re-energize supply chains, increase productivity and accelerate innovation. This has created some areas of high activity despite the overall downward trend, said Marc Lhermitte, partner at EY Consulting at EY Global Lead FDI & Attractiveness.

However, the situation regarding FDI projects in software and IT services as well as business and professional services is not so good. The number of projects decreased by 19%. and 27 percent

The authors of the report indicate that the reasons for the decline in the number of international investments are: disappointing economic growth, high inflation, growing global geopolitical tension and persistently high energy prices, especially compared to the USA.

Radical changes in the labor market had an impact. “Remote working and the growing use of collaboration technologies, combined with an increasing focus on cost control with reduced margins, mean that large office spaces are no longer needed. Confirming this trend, the number of regional headquarters in Europe more than halved in 2023 ( 51 percent) – we read in the report.

An additional reason indicated by the report's authors is the success of the American Inflation Reduction Act (IRA). It could have resulted in the redirection of some investments from Europe to the United States. “The number of projects announced by American companies in Europe decreased by 15% in 2023.” – according to EY data.

Despite the poor performance of the Old Continent, several countries in Southern and Eastern Europe benefited from the reorganization of supply chains carried out by companies and the relocation of production activities. Even though the total number of production projects decreased across the continent, it increased in several individual countries. She was among them Poland, which recorded an increase of 17% in 2023. compared to 2022 – according to the EY report.

The greatest increase was recorded in Hungary and the Czech Republic (70 percent each), as well as in Serbia (30 percent). Italy was in third place (18%). The number of investment projects also increased in Turkey (12%) and Spain (7%).

– Poland is one of the main beneficiaries of the trend of reorganizing supply chains and nearshoring (locating investments in nearby or neighboring countries – ed.). Investors are relocating investments to countries that are geographically and politically close. This trend particularly applies to investments in industry, which increased by 17%. year to year and back-office functions (accounting, documentation storage, regulatory compliance control – ed.). Good data on planned employment in new investments is the result of several large projects announced last year, said Jacek Kędzior, managing partner of EY in Poland.

As written in the report, Poland also has very good prospects in the coming months.

“The attractiveness of our country has increased significantly in the eyes of 500 business leaders dealing with FDI and polled as part of the EY study. In this year's survey, we were in 6th place, while a year earlier we were 16th in the ranking,” it was assessed.