Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €31.1bn in the fourth quarter of 2021, an increase of €2bn compared with the third quarter of 2021. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €10.4bn in the fourth quarter of 2021. An increase of €5.9bn from the previous quarter.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €11.8bn in the fourth quarter of 2021 a decrease of €352m compared with the third quarter of 2021. Dividends & distributed branch profits outflows at €17.1bn were up €2.6bn on the previous quarter while Income on debt outflows at €2.2bn were down €280m.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €31.1bn in direct investment income outflows in the fourth quarter of 2021, €19.4bn can be attributed to the manufacturing sector and €6.8bn to the information and communications sector. Manufacturing sector income outflows decreased by €0.7bn while information and communications sector income outflows increased by €2.3bn 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 by €17bn in the fourth quarter of 2021. Direct investment abroad increased by €41bn in the quarter.

The stock of FDI assets held abroad increased from €1,181.6bn in Q3 2021 to €1,295.9bn in Q4 2021, while the stock of FDI assets held in Ireland increased from €1,146.0bn in Q3 2021 to €1,194.9bn in Q4 2021. FDI assets held in Ireland by foreign investors increased by €48.9bn. FDI assets held abroad by Irish investors increased by €114.3bn.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q4 2021 net direct investment income (FDI income inflows less FDI income outflows) was -€20.6bn while the net of all other current account components (trade in merchandise, services and other income) stood at €22.2bn. The resultant balance was a current account surplus of €1.5bn.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q4 2021 there were net flows of €24bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€15bn. This contributed to a financial account surplus of €9bn.

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q4 2021 there was a net direct investment position of €101bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€680.8bn. The overall net IIP balance is -€579.7bn.

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 Q4 2021 the annual rate of return on FDI investment in Ireland was 11% compared to 2.5% on FDI investment abroad.

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