Albania, more attractive for existing investors/ Reinvested profit accounted for about 54% of total FDI in 2024
Foreign direct investments in our country last year reached 1.58 billion euros, recording the highest value in annual terms. Thus, official figures from the Bank of Albania show that in 2024, foreign direct investment flows in the country increased by 5.7%, while in 2023 they were fixed at around 1.49 billion euros.
But which indicator has driven this record figure over the past year?
Referring to the institution's figures, the increase in foreign direct investment in our country has come mainly as a result of the increase in reinvested profits by existing investors. Based on the figures, it results that reinvested profits reached 852.47 million euros, increasing by almost 6%, compared to 2023. Reinvested profits have a share of 54% compared to total foreign direct investment.
Meanwhile, on the other hand, foreign direct investment flows in the form of new capital injections account for 45% of the total. In 2024, this component reached a value of 708 million euros, registering a decrease of 3.4%, from around 733 million euros estimated in 2023.
But what could be the factors that have influenced the increase in reinvested earnings?
The confidence of existing investors may be a factor. Existing investors have gained more confidence in the Albanian market, choosing to reinvest their profits in the country. This indicates stability and sustainable potential for economic growth. Meanwhile, businesses operating in Albania have seen their profits increase, allowing them to reinvest more in expanding and improving their operations.
On the other hand, this can also be explained by the strengthening of the lek, given that reinvested profits are figures reported in lek.
However, on the negative side, the decline in foreign direct investment in the form of new capital injections indicates that Albania is failing to attract new investors. This can also be explained by global competition.
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