In the wake of the Russian invasion of Ukraine, Western companies have withdrawn from Russia, leading to a surge in foreign investment in Eastern European nations, particularly Romania. A recent report by the Frankfurter Allgemeine Zeitung highlights the opening of a state-of-the-art tire manufacturing plant by Finland's Nokian in Oradea, Romania, which represents a €650 million investment. This facility is notable for being the first of its kind to operate without harmful emissions, relying entirely on renewable energy sources.
The report notes that production facilities in Romania are becoming attractive alternatives due to their proximity to major EU markets, amid concerns over supply chain disruptions and geopolitical tensions with China. IMF representative Gita Gopinath emphasized that the fragmentation of trade and investment is now a reality, with supply chains lengthening and trade barriers on the rise.
Countries in Eastern and Southeastern Europe, including Turkey and the Western Balkan states, have recently seen promising foreign investments, particularly in the automotive, electronics, textiles, and furniture sectors. Despite a recent decline in foreign direct investments across the EU, Gopinath remains optimistic about the EU's potential to support supply chains through a combination of developed and emerging markets.
While the influx of foreign investments has slowed due to global economic challenges, the EU is encouraged to strengthen free trade regulations and deepen its internal market to attract more investors.