Across Europe, much of 2022 was overshadowed by Russia’s invasion of Ukraine and its reverberations across the continent. The war quickly triggered a refugee crisis, an unprecedented number of sanctions against Moscow, a surge in energy prices and a general feeling of uneasiness among investors. Coupled with inflation, the end of rock-bottom interest rates and the easing off from the peak of the Covid-19 pandemic, foreign direct investment (FDI) faced a challenging backdrop.
However, data from fDi Markets paints a resilient picture. Project announcements across Europe last year totalled 6305 — marginally down from 2021 and the record highs of the pre-pandemic years, but around 5% higher than the average number of foreign direct investment (FDI) projects announcements in the 10 years to 2022.
Last year’s figures were dampened by the all-but-disappearance of Russia, which is typically one of Europe’s top 10 FDI recipients, after its expulsion from the global economic order. However, this was partially offset by a handful of countries that had exceptional FDI performances. The standout was Portugal, which posted a 76.9% increase on its 2021 project announcements, while the UK, Ireland, Poland and Italy all made smaller gains.
Europe’s slice of the global FDI pie shrank in 2022, accounting for 41.2% of project announcements, down from 49.2% the year prior. However its share is nearly twice as large as its closest competitor, Asia-Pacific, which attracted 22.1% of announced projects.
Dawn of the mega-projects era
While project announcements are down, a different picture emerges when looking at capital expenditure (capex). According to fDi Markets’ preliminary figures, 2022’s total capex hit $332.9bn and the average pledged capex of each FDI project surged to $52.8m. These are the second-highest levels on record, being outdone only by the heady pre-financial crisis days of 2008. Meanwhile, the number of investments valued at $1bn or more hit a record-high of 47. Figures like these suggest FDI in Europe is being powered by a wave of large-scale projects, creating a more concentrated market dominated by larger, well-established companies.