I was looking at Greece’s International Investment Position. I realized that Greece has become a positive net foreign direct investor. That development, in the largest part, can be attributed on the exodus of foreign fixed capital from the country. Watch, the trajectory of foreign residents investments in Greece after the sovereign debt crisis broke out. Here’s the graph.
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| source: Bank of Greece |
Probably, the decline in foreign residents investments in Greece will go on for a while, until some of them will probably rush in to take advantage of the dirt cheap valuations. Of course, only after visibility about the situation on Greece has increased, so this could be a few years down the road. Even then, market entrance won't be easy since the remaining players will have gained significant market power. Maybe the planned privatizations will go some way into bringing foreign capital into Greece, but they will do nothing into creating new jobs. They will probably have the inverse effect since cutbacks are most definitely in order…
On the other hand there is an opposite-direction effect building with Greek firms being forced to sell or close down operations abroad due to financial distress. Maybe this will make sure that the net direct investments positions hovers at the zero limit.
I don’t think that there is a positive catalyst for job creation in the horizon…
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