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Foreign Direct Investment

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Direct investment in Ireland increased by €2.4bn in Q1 2020

InflowsOutflows
Q4 20176.57119.504
Q1 20183.95219.017
Q2 20185.23418.032
Q3 20185.73620.505
Q4 20182.79319.438
Q1 20194.68221.721
Q2 20193.85121.544
Q3 20194.68923.397
Q4 20194.21621.264
Q1 20205.67422.594

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.

Income on Debt OutflowsReinvested Earning OutflowsDividends & Distributed Branch Profits Outflows
Q4 20171.2415.4842.78
Q1 20181.1414.4043.473
Q2 20181.38313.6493.001
Q3 20181.49814.5374.47
Q4 20181.65613.9293.853
Q1 20191.15317.8412.727
Q2 20191.23219.3320.98
Q3 20191.48719.2152.695
Q4 20191.56415.2984.401
Q1 20201.4769.71111.406

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.

Direct Investment Income Outflowsof which Manufacturingof which Information and Communications
Q4 201719.5043.1312.8
Q1 201819.0177.3373.195
Q2 201818.0327.7642.298
Q3 201820.5056.4382.962
Q4 201819.4383.0063.043
Q1 201921.72110.4343.036
Q2 201921.5448.8115.414
Q3 201923.39713.8032.313
Q4 201921.26410.7823.581
Q1 202022.59414.644.129

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.

AbroadIn Ireland
Q4 2017-58.528-27.139
Q1 2018-2.142-14.007
Q2 2018-35.017-44.687
Q3 20181.331-9.453
Q4 201836.44444.362
Q1 201910.0517.424
Q2 2019-61.74-12.705
Q3 201928.2429.879
Q4 201939.6245.287
Q1 2020-10.7442.409

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.

AbroadIn Ireland
Q4 2017822.832882.171
Q1 2018789.946857.901
Q2 2018803.421837.622
Q3 2018849.876810.751
Q4 2018823.501873.742
Q1 2019874.924922.715
Q2 2019837.113883.561
Q3 2019922.949969.279
Q4 2019965.961997.236
Q1 2020930.0691022.04

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.

Net Direct Investment IncomeAll Other Current Account ComponentsCurrent Account Balance
Q4 2017-12.93325.76112.827
Q1 2018-15.06526.39111.325
Q2 2018-12.79823.35910.561
Q3 2018-14.76926.19611.427
Q4 2018-16.64517.6240.979
Q1 2019-17.03928.02910.99
Q2 2019-17.693-8.846-26.538
Q3 2019-18.70829.86811.16
Q4 2019-17.048-11.393-28.441
Q1 2020-16.921.712-15.208

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.

Net Direct Investment TransactionsAll Other Financial Account ComponentsFinancial Account Balance
Q4 2017-31.38946.74915.36
Q1 201811.865-12.567-0.702
Q2 20189.678.12417.794
Q3 201810.784-0.51910.265
Q4 2018-7.918-32.914-40.832
Q1 20192.6279.04711.675
Q2 2019-49.03511.377-37.659
Q3 2019-1.639-0.519-2.157
Q4 2019-5.667-32.564-38.231
Q1 2020-13.153-9.076-22.228

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.

Net Direct Investment PositionAll Other Net IIP ComponentsNet IIP
Q4 2017-59.339-436.735-496.074
Q1 2018-67.955-436.043-503.998
Q2 2018-34.201-465.777-499.977
Q3 201839.125-514.655-475.528
Q4 2018-50.241-483.749-533.984
Q1 2019-47.791-484.06-531.856
Q2 2019-46.448-508.249-554.705
Q3 2019-46.33-527.403-573.741
Q4 2019-31.275-565.15-596.435
Q1 2020-91.971-520.345-612.319

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.

Direct Investment Position Abroad (left axis)Direct Investment Position In Ireland (left axis)Return on FDI Abroad (right axis)Return on FDI in Ireland (right axis)
Q4 2017822.832882.1712.530407179108258.23321102144596
Q1 2018789.946857.9012.596759778516518.58607228572994
Q2 2018803.421837.6222.644317238409258.81602918739002
Q3 2018849.876810.7512.528957165515919.50452111684105
Q4 2018823.501873.7422.151181358614028.81175449961201
Q1 2019874.924922.7152.108183110761628.63711980405651
Q2 2019837.113883.5612.038195560217089.41734639713613
Q3 2019922.949969.2791.735198802967448.88289130374227
Q4 2019965.961997.2361.805248866155058.81697010537125
Q1 2020930.0691022.041.981573410144848.68840749872803

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.


Next Chapter >> International Investment Position