ECONOMY

Foreign investors like Greek bonds, but shy away from direct investment

Foreign investors prefer Greek bonds but shy away from other investment in the country, according to Bank of Greece data released last week. Direct foreign investment during the first 11 months of 2003 was negative. Such investments were also minuscule in 2002 (53.4 million euros) and hardly significant in previous years (1.2 billion euros in 2001 and 1.8 billion in 2002). Active foreign investment in Greece was worth about 10 percent of the country’s GDP, when in Ireland this level is 60 percent and in Belgium, 45 percent. Similarly, and despite the country’s much-advertised push into the Balkans, Greek investments abroad are worth barely over 1 percent of GDP, while for countries such as the Netherlands and Switzerland, they reach 40 percent of those countries’ GDP. The Organization for Economic Cooperation and Development (OECD) explains this lack of foreign investment as being due to insufficient competition in many markets. If these markets were to open up, the amount of active foreign investment would increase by 80 percent. Foreign funds spent 18.6 billion euros during the first 11 months of 2003 to buy Greek bonds, a significant rise over 2002.