Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €22.6bn in the first quarter of 2020, an increase of €1.3bn compared with the fourth quarter of 2019. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €5.7bn in the first quarter of 2020, up €1.5bn compared to the last quarter of 2019.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €9.7bn in the first quarter of 2020, with dividends & distributed branch profits outflows at €11.4bn and income on debt outflows at €1.5bn. Income outflows on reinvested earnings have decreased -€5.6bn from the fourth quarter of 2019 however dividends & distributed branch profits outflows have offset this decrease with an increase of €7bn.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €22.6bn in direct investment income outflows for the first quarter of 2020, €14.6bn can be attributed to the manufacturing sector and €4.1bn to the information and communications sector.

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 4.4. Direct investment transactions into Ireland increased by €2.4bn in the first quarter of 2020 down approximately €43bn from the last quarter in 2019. This decrease is not a dissimilar result to the first quarter of 2019, however, when FDI transactions in to Ireland decreased by €37bn from the fourth quarter of 2018 to €7.4bn in Q1 2019. Direct investment transactions abroad decreased to -€10.7bn this quarter, down approximately €20bn from the same period last year.

The stock of FDI assets held abroad decreased from €966bn in Q4 2019 to €930bn in Q1 2020, the €36bn decrease is explained by decreases in the value of FDI investments abroad by Redomiciled PLCs. The stock of FDI assets held in Ireland increased from €997.2bn in Q4 2019 to €1,022bn in Q1 2020.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q1 2020 net direct investment income (FDI income inflows less FDI income outflows) was -€16.9bn while the net of all other current account components (trade in merchandise, services and other income) stood at €1.7bn. The resultant balance was a current account deficit of €15.2bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q1 2020 there was net negative flows of -€13.2bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€9.1bn. This contributed to a financial account deficit of €22.2bn.

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q1 2020 there was a net direct investment position of -€92bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€520.3bn. The overall net IIP balance is -€612.3bn.

The rate of return on FDI investment in Ireland and abroad alongside the stock of FDI assets held in Ireland and abroad is presented in Figure 4.9. The return on investments in Ireland is significantly higher than the return on investments made abroad. In Q1 2020 the rate of return on FDI investment in Ireland was 8.7% compared to 2% on FDI investment abroad.

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