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Foreign investment in Germany stagnates in 2016 despite economic growth

[BERLIN] Foreign investment in Germany stayed at the same level year-on-year in 2016, Germany's trade and investment agency said on Thursday, despite the economy growing at its fastest rate for five years.

The value of projects was stable at 6.2 billion euros (S$9.6 billion) after having nearly doubled in the previous year to reach the highest level on record, according to the survey by government agency Germany Trade & Invest (GTAI).

The agency said foreign investment created at least 29,000 new jobs in Germany and the number of foreign investors rose 2 per cent, with 1,944 new projects started during the year.

Germany's economy - the biggest in Europe - grew 1.9 per cent last year, driven by higher household and state spending, and picked up speed in the first quarter of 2017, expanding 0.6 per cent from 0.4 per cent in the last three months of 2016.

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"Germany is highly attractive for foreign investors. They want to benefit from the economic upswing or secure technology," GTAI official Thomas Bozoyan said.

China was the largest single investor for a third straight year with 281 new projects, followed by the United States with 242, Switzerland with 194 and Britain with 125.

The figures exclude foreign-led mergers and acquisitions, which last year account more than quadrupled to reach 1,707 in 2016 compared with the previous year, according to the survey.

Those were dominated by companies from the United States and Britain. Chinese takeovers accounted for less than 3 per cent of the foreign-led M&A deals.

"But their transaction volume is relatively high. Chinese investors spent a lot of money to buy into German companies," Mr Bozoyan said.

Home appliance maker Midea's acquisition of robot-maker Kuka was just one deal from China last year, with the total value of Chinese-led deals at more than US$10 billion, about 40 times as much as in 2015, according to Thomson Reuters data.