France sees rare net positive FDI flow in 2013 – central bank

Net foreign direct investment into France turned positive in 2013 for the first time in years, the central bank said on Monday.

But rather than a sign of newly-won investor confidence, last year’s improvement was largely due to French firms reducing their investments abroad while foreign companies’ investment in France was stable.

The Bank of France recorded net investment inflows of 5 billion euros ($6.8 billion) last year after 14 billion euros of outflows the previous year.
President Francois Hollande is keen to attract foreign investment to help revive the euro zone’s second biggest economy, which has produced little growth since the now deeply unpopular leader came to office in May 2012.

A recent study by Ernst and Young found that the number of foreign investment projects in France had risen 9 percent last year to 514 projects, though that lagged increases in Britain and Germany.

France has won one of its biggest FDI deals in years with GE’s investment in Alstom, backed last week by the French government. U.S. conglomerate General Electric will invest 12.35 billion euros in Alstom’s power assets.

Despite the improvement in FDI flows last year, France’s net external position – foreigners’ claims on French consumers, companies and public bodies – weakened to a deficit of 16.6 percent of national income last year after 11.3 percent in 2012.

The Bank of France attributed the deterioration to an increase in public sector debt in the hands of foreign investors and swings in market prices for French and foreign assets.