BERLIN (Reuters) – Foreign direct investment (FDI) in Germany slumped to 3.5 billion euros ($3.75 billion) in the first half of this year from 34.1 billion in the same period in 2022, Bundesbank data shows.
This is the lowest FDI in almost 20 years and points to a loss of attractiveness of the country as a business location,, the Germany Economic Institute (IW) said separately on Tuesday.
“When the chancellor and the economics minister praise Germany’s alleged attractiveness as a business location, this cannot refer to the first half of 2023,” said Juergen Matthes, head of the Global & Regional Markets Research Unit at IW.
If the main reason for the poor figures was doubt about the quality of the location, he said, this was unlikely to change in the second half of the year.
“Hardly anyone from abroad wants to invest here anymore, the location conditions are obviously too bad for that,” Matthes said.
The German Economics Ministry says there is 80 billion euros of foreign direct investments in the pipeline.
Chancellor Olaf Scholz has said that he sees a “great future” for Germany as an industrial location following a more than 30-billion-euro agreement with U.S chip company Intel in June to develop two chip-making plants in Magdeburg.
U.S. chipmaker Wolfspeed also said in February it would build a chip plant and a research and development centre in Germany.
However, Matthes said these had not even broken ground and “we all know how long construction projects take”, adding that the investments by foreign semiconductor companies had less to do with the attractiveness of Germany as a business location and more due to “exorbitant subsidies” that Germany offered them.
($1 = 0.9327 euros)
(Reporting by Reinhard Becker, additional reporting by Andreas Rinke and Alexander Ratz; Writing by Maria Martinez, editing by Emelia Sithole-Matarise)
