Foreign direct investments (FDI) in Albania went up by 7.7% y/y to €168mn in the first quarter of 2017, after jumping by over 70% y/y in the previous quarter, according to preliminary central bank data.
Despite the moderate level of y/y growth, FDI is at its lowest level since Q1 2016.
Of the total net FDI, direct investments or reinvestments of foreign companies accounted for €188mn while a negative flow of €20mn came from a debt between related companies, preliminary balance of payments data indicated.
Inflows in the form of direct investments were concentrated in the energy sector (about 41%), oil (37%), financial intermediation (over 6%), according to business news provider Monitor.
In 2016, FDI in Albania increased by 10.4% y/y to €983mn, which is a record high figure in the last four years, with FDI estimated to account for around 10% of projected GDP.
In the last two years, foreign investments in Albania have been significantly influenced by the works of the Trans Adriatic Pipeline (TAP) gas pipeline and the construction of hydropower plants on the Devoll River. However, concerns relate to the fact that these two projects will finish in the next few years and diversification in the FDI in the medium term is required.
Investments in the hydrocarbon sector are dependent on the international market. In 2015, investments in hydrocarbons in Albania fell sharply due to lower oil prices, but they recovered in 2016 and in the first quarter of 2017 due to favorable market prices.