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Foreign Direct Investment

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Direct investment in Ireland increased by €19.7bn in Q4 2018

Q1 20174.25816.749
Q2 20174.49817.322
Q3 20175.14218.108
Q4 20176.8319.869
Q1 20183.86817.374
Q2 20185.83218.07
Q3 20185.95521.072
Q4 20182.90417.953

Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €18bn in the fourth quarter of 2018, a decrease of €1.9bn compared with the fourth quarter of 2017. Direct investment income inflows, which represent income earned abroad by investors located in Ireland was €2.9bn in the fourth quarter of 2018, down €3.9bn compared to the same period in 2017.

Income on Debt OutflowsReinvested Earnings OutflowsDividends & Distributed Branch Profits Outflows
Q1 20171.66812.0343.046
Q2 20171.56512.9032.854
Q3 20171.46312.3694.277
Q4 20171.38815.7232.759
Q1 20181.22912.1823.963
Q2 20181.35412.9723.744
Q3 20181.50215.0734.497
Q4 20181.65412.5163.783

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €12.5bn in the fourth quarter of 2018, with dividends & distributed branch profits outflows at €3.8bn and income on debt outflows at €1.7bn.

AbroadIn Ireland
Q1 20170.1274.796
Q2 201715.41711.231
Q3 20178.1184.049
Q4 2017-58.352-21.185
Q1 20183.52-22.818
Q2 2018-33.811-44.02
Q3 20181.882-9.079
Q4 201839.65319.711

Foreign direct investment transactions abroad and in Ireland are shown in Figure 4.3. Direct investment into Ireland increased by €19.7bn in the fourth quarter of 2018. This change was driven by increases in equity of €9bn and other capital of €12.5bn.  Direct investment abroad increased by €39.7bn in the quarter, mainly due to increased equity investment of €62bn.

AbroadIn Ireland
Q1 2017844.382813.829
Q2 2017825.224782.239
Q3 2017785.919764.825
Q4 2017717.133744.386
Q1 2018702.261721.773
Q2 2018778.14773.907
Q3 2018823.744750.855
Q4 2018796.649794.329

The stock of FDI assets held abroad decreased from €823.7bn in Q3 2018 to €796.6bn in Q4 2018, while the stock of FDI assets held in Ireland increased from €750.9bn in Q3 2018 to €794.3bn in Q4 2018.

Net Direct Investment IncomeAll other Current Account ComponentsCurrent Account Balance
Q1 2017-12.49117.5475.056
Q2 2017-12.8249.521-3.303
Q3 2017-12.96626.72613.76
Q4 2017-13.03922.459.411
Q1 2018-13.50623.0589.552
Q2 2018-12.23822.410.162
Q3 2018-15.11724.2219.104
Q4 2018-15.04915.2270.178

The impact of foreign direct investment income on the current account balance is shown in Figure 4.5. In Q4 2018 net direct investment income (FDI income inflows less FDI income outflows) was -€15bn while the net of all other current account components (trade in merchandise, services and other income) stood at €15.2bn. The resultant balance was a current account deficit of €0.2bn.

Net Direct Investment TransactionsOther Financial Account ComponentsFinancial Account Balance
Q1 2017-4.669-14.731-19.4
Q2 20174.186-7.975-3.789
Q3 20174.0697.60611.675
Q4 2017-37.16753.35916.192
Q1 201826.338-12.66113.677
Q2 201810.2094.34114.55
Q3 201810.961-1.659.311
Q4 201819.942-31.682-11.74

The impact of direct investment transactions on the financial account balance is shown in Figure 4.6. In Q4 2018 there was a net surplus of €19.9bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€31.7bn.

Net Direct Investment PositionOther Net IIP ComponentsNet IIP
Q1 201730.553-499.467-468.913
Q2 201742.985-516.629-473.644
Q3 201721.094-481.71-460.616
Q4 2017-27.253-411.196-438.449
Q1 2018-19.512-414.571-434.084
Q2 20184.233-440.324-436.092
Q3 201872.889-495.334-422.445
Q4 20182.32-455.382-453.063

The net stock of foreign direct investment assets in the net International Investment Position (IIP) is shown in Figure 4.7. In Q4 2018 there was a net direct investment position of €2.3bn. Other net IIP components (Portfolio Investment, Other Investment and Reserve Assets) accounted for -€455.4bn. The overall net IIP balance is -€453.1bn.

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)
Q1 2017844.382813.8292.102010701317657.76489901441212
Q2 2017825.224782.2392.186073114693718.61693165388072
Q3 2017785.919764.8252.573038697372129.13659987578858
Q4 2017717.133744.3862.890398294319189.67884941414804
Q1 2018702.261721.7732.8960742515959210.0686781023951
Q2 2018778.14773.9072.785102937774699.48705723039073
Q3 2018823.744750.8552.7296101701499510.1730693675876
Q4 2018796.649794.3292.32963325128139.37508261690055

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 4.8. The return on investments in Ireland is significantly higher than the return on investments made abroad. In Q4 2018 the rate of return on FDI investment in Ireland was 9.4% compared to 2.3% on FDI investment abroad.

Next Chapter >> International Investment Position