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Foreign direct investment is picking up again

While foreign money started fleeing the Baltics and 2015 and early 2016, foreign direct investment is once again picking up the pace in Latvia and Estonia. There's no official data yet for Lithuania.

Experts say there were several factors that made foreign investment lag behind.

First of all, they say, EU funds were absorbed slowly across Europe, including the Baltics. As companies were waiting for EU funds to reappear, they paused investment decisions.

Secondly, the Baltics have to deal with an unfriendly Russia. As sanctions were introduced, companies had to find new export markets rather than increase business volumes or take up development. While the situation hasn't changed a lot, the NATO presence in the Baltics is contributing to the safety and perceived safety of the Baltics.

Lastly, the situation in Europe is getting better as well. The strain of the refugee crisis is decreasing and Europe's economic growth is picking up as well. The main investors in the Baltics come from EU member states. Brexit is still on the agenda, but it might prompt investors to look for new places to pour their money into and so establish new companies in the EU. It's possible they'll choose the Baltics to do that.

 

(Sources: Bank of Latvia, Bank of Lithuania, Bank of Estonia.)

Lithuania was hard-hit last year as foreign investment fell €714m to €12.78 billion in the first three quarters of 2016. There's no data about the last quarter yet.

While foreign investment fell €24m on year to €13.52 billion in Latvia, it had fallen €308m within the first half of 2016 but picked up again in the latter half of the year. 

Meanwhile Estonia saw foreign investment fall starting mid-2015 and remain unstable until Q3 2016. Foreign investment in Estonia fell €97m in that period of time. However in Q4 last year investment shot up remarkably by €677m, reaching an all-time high of €18.21 billion.

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