International Accounts Q1 2024

Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €48.5bn in the first quarter of 2024, an increase of €11.4bn compared with the fourth quarter of 2023. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €19bn in the first quarter of 2024, an increase of €153m from the previous quarter.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €7bn in the first quarter of 2024, a decrease of €14.7bn compared with the fourth quarter of 2023. Dividends & distributed branch profits outflows at €38.3bn were up €26.8bn on the previous quarter while income on debt outflows at €3.2bn were down €630m.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €48.5bn in direct investment income outflows in the first quarter of 2024, €28.1bn can be attributed to the manufacturing sector and €12.3bn to the information and communications sector. Manufacturing sector income outflows increased by €11.2bn while information and communications sector income outflows decreased by €97m 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 decreased by €1.6bn in the first quarter of 2024. Direct investment abroad increased by €15bn in the quarter.

The stock of FDI assets held abroad increased from €1,209.4bn in Q4 2023 to €1,265.1bn in Q1 2024, while the stock of FDI assets held in Ireland decreased from €1,276.1bn in Q4 2023 to €1,190.9bn in Q1 2024. FDI assets held abroad by Irish investors increased by €55.7bn. FDI assets held in Ireland by foreign investors decreased by €85.2bn.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q1 2024 net direct investment income (FDI income inflows less FDI income outflows) was -€29.5bn while the net of all other current account components (trade in merchandise, services and other income) stood at €52bn. The resultant balance was a current account surplus of €22.6bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q1 2024 there were net flows of €16.5bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€4.4bn. This contributed to a financial account surplus of €12.2bn.

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q1 2024 there was a net direct investment position of €74.2bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€545bn. The overall net IIP balance was -€470.8bn.

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 as FDI income divided by FDI positions. The return on investments in Ireland is significantly higher than the return on investments made abroad. In Q1 2024 the annual rate of return on FDI investment in Ireland was 14.5% compared to 5.9% on FDI investment abroad.