Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €23.5bn in the first quarter of 2020, an increase of €1.2bn compared with the fourth quarter of 2019. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €6.2bn in the first quarter of 2020, up €1.3bn compared to the same period in 2019.

The composition of direct investment income outflows is presented in Figure 5.2. Income outflows on reinvested earnings were €9.8bn in the first quarter of 2020, with dividends & distributed branch profits outflows at €11.4bn and income on debt outflows at €2.3bn. Income outflows on reinvested earnings have decreased by €5.4bn from the fourth quarter of 2019 while dividends & distributed branch profits outflows have offset this decline with an increase of €6.9bn.

Figure 5.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €23.5bn in direct investment income outflows for the first quarter of 2020, €14.9bn can be attributed to the manufacturing sector and €4.3bn to the information and communications sector. The level of manufacturing direct investment income outflows has increased by €2.4bn from the fourth quarter of 2019. The information and communications sector direct investment income outflows are up €0.5bn from the fourth quarter of 2019.

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 5.4. Direct investment into Ireland increased by €4.0bn in the first quarter of 2020. Direct investment abroad decreased by €10.6bn in the quarter.

The stock of FDI assets held abroad decreased from €966.6bn in Q4 2019 to €934.0bn in Q1 2020, while the stock of FDI assets held in Ireland increased from €1,025.8bn in Q4 2019 to €1,038.3bn in Q1 2020.

The impact of foreign direct investment income on the current account balance is shown in Figure 5.6. In Q1 2020 net direct investment income (FDI income inflows less FDI income outflows) was -€17.4bn while the net of all other current account components (trade in merchandise, services and other income) stood at €2.8bn. The resultant balance was a current account deficit of €14.6bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 5.7. In Q1 2020 there was net negative flows of -€14.7bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€9.4bn. This contributed to a financial account deficit of €24.1bn

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 5.8. In Q1 2020 there was a net direct investment position of -€104.3bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€534.8bn. The overall net IIP balance is -€639.2bn.

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 5.9. 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 8.9% compared to 2.3% on FDI investment abroad.

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