Foreign direct investment (FDI) into Central, Eastern, and Southeastern Europe fell sharply in 2024. Investment volume dropped by about one quarter, from roughly €100 billion to just over €75 billion compared with the previous year, according to a new report by the Vienna Institute for International Economic Studies (wiiw). In the EU member states of the region, FDI also declined by 24 percent.
Poland (– 48 percent) and Romania (– 15 percent) were hit hardest. “Last year, Germany’s industrial crisis and uncertainty over a potential second Trump presidency clearly impacted the region,” says wiiw economist Olga Pindyuk. Ukraine’s FDI fell by 26 percent, though wartime conditions make it a special case.
Some countries bucked the trend: Czechia, Croatia, Hungary, Lithuania, Slovakia (boosted by large single investments), the six Western Balkan states, and Turkey all saw increases. Slovakia’s inflows were about ten times higher than a year earlier, partly skewed by major one-off projects.
Greenfield Projects Plunge
New (“Greenfield”) investment projects collapsed: in Q1 2025, announced projects fell 26 percent quarter-on-quarter, and committed capital plunged 55 percent—both at five-year lows, suggesting waning investor confidence.
Only Albania, Kosovo, Latvia, Romania, and Ukraine saw rises in new projects (and in some cases, pledged capital) in Q1.
Shifting Investor Patterns
German firms halved their commitments to €5.4 billion and reduced project counts by 21 percent to 203 between Q2 2024 and Q1 2025. Austrian investors kept volume steady at €1.4 billion but cut projects from 49 to 34, reflecting caution amid global uncertainty.
China remained the largest new investor at €11.2 billion despite lower commitments. About 70 percent of existing FDI still originates in EU countries; China’s share is roughly 1 percent.
Structural Change Underway
wiiw views these shifts as signs of structural change. The region’s role as a low-cost “extended workbench”—notably in automotive—may be waning, with FDI’s GDP share often declining. The current growth model could become unsustainable.
The institute recommends boosting investments in education, R&D, and pursuing targeted industrial policies.
