Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €21.3bn in the fourth quarter of 2019, an increase of €1.8bn compared with the fourth quarter of 2018. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €4.2bn in the fourth quarter of 2019, up €1.4bn compared to the same period in 2018.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €15.3bn in the fourth quarter of 2019, with dividends & distributed branch profits outflows at €4.4bn and income on debt outflows at €1.6bn. Income outflows on reinvested earnings have decreased -€3.9bn from the third quarter of 2019 while dividends & distributed branch profits outflows have increased by €1.7bn.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €21.3bn in direct investment income outflows for the fourth quarter of 2019, €10.8bn can be attributed to the manufacturing sector and €3.6bn to the information and communications sector. While the level of manufacturing direct investment income outflows decreased by €3bn from the third quarter of 2019, it increased €7.8bn when compared with the fourth quarter of 2018. The information and communications sector direct investment income outflows are up €0.5bn from the fourth quarter of 2018.

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 4.4. Direct investment into Ireland increased by €45.3bn in the fourth quarter of 2019. Direct investment abroad increased by €39.6bn in the quarter.

The stock of FDI assets held abroad increased from €922.9bn in Q3 2019 to €966bn in Q4, while the stock of FDI assets held in Ireland increased from €969.3bn in Q3 2019 to €997.2bn in Q4 2019.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q4 2019 net direct investment income (FDI income inflows less FDI income outflows) was -€17bn while the net of all other current account components (trade in merchandise, services and other income) stood at -€11.4bn. The resultant balance was a current account deficit of -€28.4bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q4 2019 there was net negative flows of -€5.7bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€32.6bn. This contributed to a financial account deficit of -€38.2bn

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q4 2019 there was a net direct investment position of -€31.3bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€565.2bn. The overall net IIP balance is -€596.4bn.

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 Q4 2019 the rate of return on FDI investment in Ireland was 8.8% compared to 1.8% on FDI investment abroad.

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