Amid global competition for investment, what more can Greece do?

Greece's attractiveness as an investment destination continues to strengthen, despite the downturn at a European level.

The EY Attractiveness Survey Greece 2024, now in its sixth edition, has become a benchmark for monitoring the attractiveness of the country as an investment destination, as well as a measure of the progress made in recent years.

Greece's strongest performance in FDI, for two years in a row

Despite investments in Europe decreased by 4% in 2023, with a cumulative decline of 14% since 2017, Greece attracted a bigger number of FDI. The EY European Investment Monitor recorded 50 FDI projects for 2023, marking the strongest performance for the country since the database was created in 2000 and placing Greece in the 19th place among the 45 countries surveyed.

Cumulatively, the FDI projects over the past two and three years represent 25% and 33%, respectively, of all investments recorded since 2000. Investments made since 2019, the first year after Greece's exit from the bailout programme, account for 49% out of the total.

The qualitative composition of investments continues to improve, with a significant amount directed toward knowledge-intensive and high value-added activities, as well as sectors critical for the transformation of Greece’s economic production model. Key sectors include software and IT services (ranked first, though with a reduced share of 24% from 40% last year), professional services and business services (16%), and transportation and logistics (16%).

Investment plans at an all-time high

One out of two respondents (51%) indicated that their companies plan to establish or expand operations in Greece over the next year. This marks the highest performance for this critical indicator, which stood at 30% in 2019, the first year the survey was conducted for Greece. Among very large enterprises (revenues > €1.5 billion), the percentage is even higher (65%) while, among companies already established in Greece, it reaches 70%.

The investment plans of these companies mainly cover business support services (66%), sales and marketing offices (55%), and research and development (51%). Access to skills (41%) is identified as the main reason for establishing new or expanding existing activities.

Key risks affecting Greece's attractiveness over the next three years include high interest rates and tightening financial conditions (44%), the high levels of public debt and its impact on taxes (34%), and high inflation (32%).

Investors' perceptions of Greece continue to improve, with growing optimism for the next three years

Sixty-two percent of respondents, up from 60% last year and 47% in 2019, stated that their view of Greece as a potential location for business expansion has improved over the past year.

An even larger percentage (69%, up from 67% last year) believes that the country’s attractiveness will further increase over the next three years. This optimism is largely attributed to the quality of infrastructure (42%), the country's strategic geographical location (35%), and the presence of a strong sustainability agenda (34%). 

Effective attractiveness policies with ongoing improvements in specific areas

The improvement in Greece’s image as a potential investment destination is linked to effective policies aimed at attracting international investors. Overall, 79% of participants, up from 76% in 2023, rated the country's attractiveness policy as effective.

Regarding specific aspects of Greece’s policy to enhance its attractiveness, the best performance is recorded in attracting companies (72%), attracting innovative activities (71%), and attracting human talent (68%). Policies for attracting capital (63%), business headquarters (58%), and the establishment of global centers for competitiveness and world-class clusters (52%) are seen as less effective. Notably, three of these indicators have slightly declined compared to last year, yet all are significantly improved from the survey's first year in 2019, when none exceeded 50%.

Strong performance in key individual factors, except for taxation

Participants also evaluated Greece based on a series of criteria related to the most critical factors influencing investment decisions today: sustainability, electricity, technology, talent, and taxation.

For four out of these five areas, the overall perception of the country is deemed satisfactory, with more than half of respondents rating Greece’s performance in each aspect as "good" or "very good." Average percentages of positive responses range between 61% and 63%. However, taxation is an exception, with the average positive response rate at 53%.

Need for a faster pace

In an adverse environment for Europe, Greece managed to improve its performance, both in terms of the number of attracted FDI, as well as in terms of the investors’ perception of its attractiveness. At the same time, the survey also highlights areas where Greece lags behind competitor countries, many of which are moving at an even faster pace. In the race to attract investments, Greece starts from a lower baseline.

For the fourth year, education and skills, taxation, and high-tech industries and innovation remain key priorities for Greece

Regarding areas where the country should concentrate its efforts to maintain its competitive position in the global economy, respondents prioritize three main areas: develop education and skills and facilitate access to talent (28%), reduce taxation (27%), and support high-tech industries and innovation, such as Cleantech (24%). These three factors consistently top the list of priorities for the past four years.

If interested in the Greek survey, please click here.