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Russia, Poland Boost Investment Inflows, FDI Intelligence Says

Russia and Poland are becoming the fastest-growing European investment destinations as western Europe remains in the grip of the credit crisis, FDI Intelligence said.

While western Europe’s share in global foreign direct investment declined last year, the continent’s emerging nations increased their slice, attracting $88.9 billion, FDI Intelligence, which tracks investment flows, said in a report today. North America and eastern Europe were the world’s only region with growth in the number of projects, it said

"For FDI growth in Europe, the countries in the east, such as Russia and Poland, are the continent’s big story," according to the report. "FDI levels across the region started to recover."

The former communist countries of Europe and central Asia are recovering from their deepest recessions since the transition to free-market policies two decades ago.

The International Monetary Fund expects the region’s economies to expand 3.7 percent this year. That compares with 1.6 percent for the euro region, where the sovereign-debt crisis has forced Greece, Ireland and Portugal to accept international bailouts.

The number of foreign-direct investment projects in eastern Europe, including the expansion of existing facilities and newly created businesses, increased 23 percent last year to 1,662, the FDI Intelligence report showed. The biggest chunk of the money went into financial services, led by Italy’s UniCredit SpA (UCG), the largest bank in emerging Europe.

Russia’s Rank

The region accounted for 14 percent of FDI projects worldwide, compared with 11 percent in 2009. West European projects dropped by 15 percent to 2,514.

Russia remained the No.1 target country for investment directed into emerging Europe and ranked sixth worldwide, behind the U.S., China, the U.K., India and Germany.

Poland had the largest increase in investment in the region, at 34 percent, when the number of projects as well as their value is combined, according to the report.

Eastern Europe is also gaining in importance as a source of FDI. It became the fourth largest region for outward investment last year with $30.4 billion, overtaking the Middle East. Investments directed elsewhere grew 17 percent, the only region to register an increase, FDI Intelligence said.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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