Financial centres in Europe’s emerging economies have seen a reduction in both inward and outward foreign direct investment (FDI) in recent years. The top 10 hubs in the region comprising central and eastern Europe, Turkey and Cyprus attracted a total of $1.6bn inward investment between March 2014 and February 2017 – a value less than half the amount registered in the previous three years, according to estimates by greenfield investment monitor fDi Intelligence. Outward FDI also halved over the same period.
Despite a conspicuous drop in capital expenditure and number of projects, Istanbul continues to lead the inward FDI ranking, with $235m and seven projects. Political turmoil in Turkey has undoubtedly muted international investors’ enthusiasm for the country as well as its main financial centre in recent years.
In second place is Budapest, with $213m and six projects – an impressive improvement for the Hungarian hub, which did not appear in the previous ranking. It is followed by Minsk and Prague, in third and fourth place, respectively. As was the case with Istanbul, the Czech financial centre has also suffered a large drop in inward FDI, which in this case meant losing its previous second place in the ranking.
Probably the best known IFC in the area is Moscow, which has lost ground in the ranking, falling to ninth place from its previous fourth.
The Russian hub, however, remains the undisputed leader when it comes to outward FDI, with $1.25bn and 37 projects originating from its financial sector. It is followed by Limassol, with $462m and 15 projects. The Cypriot city scored well in the previous ranking too, where it also occupied second place. Istanbul has climbed up two positions and replaced St Petersburg in third place.