The recent significant decline in asset prices is increasingly attracting more companies interested in buying cheap firms and properties.

This is the explanation of financial analysts to the surprising increase in foreign direct investments (FDI) in January, amid global crisis and a liquidity shortage.

Data released by the National Bank of Romania (BNR) shows that FDI rose to €912 million in the first month of 2009, 51.2 percent higher year-on-year. By the end of 2008, FDI began declining, due to the financial crisis. Foreign investors brought only €384 million to Romania in December. "Foreign companies started buying properties because these are becoming less expensive. In spite of the crisis, many companies know that they will have long-term profit," according to the former President of Banca Romana de Dezvoltare (BRD, currently owned by French Societe Generale group, Bogdan Baltazar. "If [FDI] continues at a similar level, this would be a vote of confidence for the Romanian economy," he added.

However, other economists disagree. "It is too soon, they have just started to become less expensive, and the degree of uncertainty is still high," the Managing Partner of Financial View consulting, Dragos Cabat, told Business Standard. According to the Chief Economist of Banca Comerciala Romana (BCR), some €200 million of FDI are made up by U.S. carmaker Ford's investments in Romania, a further €100 mln is reinvested profit, and the remainder is made up of business consolidation, acquisitions and investments.

Source: Standard.Ro