Almost every second German company is thinking about investing in Ukraine – survey
6 February 15:35
Poland, Romania, and Ukraine are the three most important target countries for German investors in the short and medium term. These are the conclusions of the “German Business Survey in Central and Eastern Europe until 2025” based on the results of a survey conducted from November 20 to December 31 last year by KPMG and the Committee on Economic Relations in Eastern Europe, Komersant ukrainskyi reports.
According to the survey, after Poland and Romania, Ukraine ranks third among the target countries for companies willing to invest. This is followed by Hungary and the Czech Republic. Speaking of the latter, it has the highest growth rate of potential investment interest – from 23% in 2025 to 31% by 2030. And the most important reasons for German companies to invest in Poland are proximity to Germany and existing business development opportunities.
What are the investment prospects for Ukraine?
This year, 35% of the companies that took part in the survey plan to invest in Ukraine. The possibility of investing until 2030 is considered by 41% of companies. Currently, every fifth company (21%) has already invested in the Ukrainian economy. 18% want to invest in Ukraine if Russia ends the war and reaches a peace agreement.
“Ukraine has the potential to become a new energy center for the European Union, to be an alternative production location and to play an important role in IT and outsourcing for European companies,” said Nikolai Kiskalt, Head of Central and Eastern Europe at KPMG in Germany.
What are the biggest risks and benefits for investment?
The German companies surveyed perceive the war in Ukraine and the threat from Russia as a risk for the region. Two-thirds of respondents (67%) consider the lack of security in individual countries and political risks to be the biggest deterrents to investment. This is closely followed by problems caused by corruption in some CEE countries (38%) and bureaucracy (31%).
Among the three main arguments in favor of investing, German companies named the availability of local demand, skilled workers, and low labor costs.
For 40% of companies, high domestic demand is the most important advantage for investing in Central and Eastern Europe. 37% of respondents value the availability of skilled workers. Another third (33%) see low labor costs as the main argument in favor of investment activity in a particular region.
What does Ukraine’s investment balance look like now?
In the first 11 months of 2024, foreign direct investment in the country decreased by 14% year-on-year. This was reported in January this year by Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy.
According to the data, for 11 months of 2024, the inflow of direct investment in Ukraine amounted to $3.98 billion, the net inflow of direct investment (net of direct investment outside Ukraine) – $3.64 billion. This is a 14% decrease (19% in the case of net direct investment) compared to the same period of the previous year.
Since the lion’s share of direct investment (75% in 2023, 64% in 11 months of 2024) is reinvested profits, the decrease is partly due to the easing of the NBU’s restrictions on the repatriation of “new” dividends accrued since January 1, 2024.
