Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €42.2bn in the first quarter of 2022, an increase of €11bn compared with the fourth quarter of 2021. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €8.7bn in the first quarter of 2022. A decrease of €1.8bn from the previous quarter.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €10.9bn in the first quarter of 2022 a decrease of €847m compared with the fourth quarter of 2021. Dividends & distributed branch profits outflows at €28.8bn were up €11.7bn on the previous quarter while Income on debt outflows at €2.5bn were up €310m.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €42.2bn in direct investment income outflows in the first quarter of 2022, €31bn can be attributed to the manufacturing sector and €7bn to the information and communications sector. Manufacturing sector income outflows increased by €11.6bn while information and communications sector income outflows increased by just €0.2bn when compared to the previous quarter.

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 4.4. Direct investment into Ireland increased marginally by €47m in the first quarter of 2022. Direct investment abroad increased by €9.2bn in the quarter.

The stock of FDI assets held abroad decreased from €1,295.9bn in Q4 2021 to €1,193.6bn in Q1 2022, while the stock of FDI assets held in Ireland increased from €1,194.9bn in Q4 2021 to €1,213.5bn in Q1 2022. FDI assets held in Ireland by foreign investors decreased by €102.3bn. FDI assets held abroad by Irish investors increased by €18.6bn.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q1 2022 net direct investment income (FDI income inflows less FDI income outflows) was -€33.5bn while the net of all other current account components (trade in merchandise, services and other income) stood at €50.9bn. The resultant balance was a current account surplus of €17.4bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q1 2022 there were net flows of €9.2bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was €2.4bn. This contributed to a financial account surplus of €11.6bn.

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q1 2022 there was a net direct investment position of -€19.9bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€580bn. The overall net IIP balance is -€600bn.

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 rate of return is calculated by FDI income divided by FDI positions. The return on investments in Ireland is significantly higher than the return on investments made abroad. In Q1 2022 the annual rate of return on FDI investment in Ireland was 11.3% compared to 2.6% on FDI investment abroad.