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Foreign Direct Investment

Foreign Direct Investment

Direct Investment Income Outflows increased by €314m in Q4 2022

Online ISSN: 2565-6384
CSO statistical publication, , 11am
Q3 20205.23331.143
Q4 20208.95523.866
Q1 20219.97236.746
Q2 20218.17234.09
Q3 20214.30628.748
Q4 202112.33629.32
Q1 20228.65542.32
Q2 20229.6840.993
Q3 20225.63441.626
Q4 202214.25341.312

Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €41.3bn in the fourth quarter of 2022, a decrease of €314m compared with the third quarter of 2022. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €14.3bn in the fourth quarter of 2022, an increase of €8.6bn from the previous quarter.

Income on Debt OutflowsReinvested Earning OutflowsDividends & Distributed Branch Profits Outflows
Q3 20202.86624.5073.769
Q4 20202.49217.4223.951
Q1 20212.569-1.68335.86
Q2 20212.31625.3656.409
Q3 20212.35312.73413.661
Q4 20212.09510.61316.613
Q1 20222.511.02828.791
Q2 20222.66632.5225.805
Q3 20223.08121.38317.162
Q4 20223.7546.19531.363

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €6.2bn in the fourth quarter of 2022, a decrease of €15.2bn compared with the third quarter of 2022. Dividends & distributed branch profits outflows at €31.4bn were up €14.2bn on the previous quarter while income on debt outflows at €3.8bn were up €673m.

Direct Investment Income Outflowsof which Manufacturingof which Information and Communications
Q3 202031.14318.8518.716
Q4 202023.86614.6066.07
Q1 202136.74625.6977.856
Q2 202134.0920.9577.857
Q3 202128.74819.6734.474
Q4 202129.3219.0786.507
Q1 202242.3231.057.078
Q2 202240.99326.4738.87
Q3 202241.62630.4716.313
Q4 202241.31225.64510.453

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €41.3bn in direct investment income outflows in the fourth quarter of 2022, €25.6bn can be attributed to the manufacturing sector and €10.5bn to the information and communications sector. Manufacturing sector income outflows decreased by €4.8bn while information and communications sector income outflows increased by €4.1bn when compared to the previous quarter.

AbroadIn Ireland
Q3 2020-29.716-16.887
Q4 202010.966.789
Q1 2021-0.034-17.134
Q2 202111.8337.019
Q3 2021-1.233-8.431
Q4 202138.51114.378
Q1 20229.335-0.465
Q2 2022-9.494-33.949
Q3 2022-12.30236.807
Q4 202217.532-0.978

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 4.4. Direct investment into Ireland decreased by €978m in the fourth quarter of 2022. Direct investment abroad increased by €17.5bn in the quarter.

AbroadIn Ireland
Q3 2020941.211155.529
Q4 2020978.8081128.426
Q1 20211066.0681193.277
Q2 20211107.3021200.099
Q3 20211164.4371212.906
Q4 20211270.81231.563
Q1 20221175.8921236.321
Q2 20221099.6681288.106
Q3 20221099.0521399.554
Q4 20221110.3991320.785

The stock of FDI assets held abroad increased from €1,099.1bn in Q3 2022 to €1,110.4bn in Q4 2022, while the stock of FDI assets held in Ireland decreased from €1,399.6bn in Q3 2022 to €1,320.8bn in Q4 2022. FDI assets held in Ireland by foreign investors decreased by €78.8bn. FDI assets held abroad by Irish investors increased by €11.3bn.

Net Direct Investment IncomeAll Other Current Account ComponentsCurrent Account Balance
Q3 2020-25.9135.8969.987
Q4 2020-14.91115.670.76
Q1 2021-26.77443.82817.054
Q2 2021-25.91842.27716.359
Q3 2021-24.44247.10822.666
Q4 2021-16.98421.5644.58
Q1 2022-33.66550.70817.043
Q2 2022-31.31347.16115.848
Q3 2022-35.99231.511-4.48
Q4 2022-27.05942.88415.825

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q4 2022 net direct investment income (FDI income inflows less FDI income outflows) was -€27.1bn while the net of all other current account components (trade in merchandise, services and other income) stood at €42.9bn. The resultant balance was a current account surplus of €15.8bn.

Net Direct Investment TransactionsAll Other Financial Account ComponentsFinancial Account Balance
Q3 2020-12.82914.5271.697
Q4 20204.1716.19710.371
Q1 202117.1-6.1410.959
Q2 20214.81418.38723.203
Q3 20217.1987.06714.264
Q4 202124.133-11.68412.45
Q1 20229.81.411.2
Q2 202224.455-17.9036.553
Q3 2022-49.10929.747-19.364
Q4 202218.515.27623.787

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q4 2022 there were net flows of €18.5bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was €5.3bn. This contributed to a financial account surplus of €23.8bn.

Net Direct Investment PositionAll Other Net IIP ComponentsNet IIP
Q3 2020-214.319-501.892-716.211
Q4 2020-149.618-510.199-659.817
Q1 2021-127.209-539.431-666.64
Q2 2021-92.797-526.803-619.6
Q3 2021-48.469-579.38-627.849
Q4 202139.237-659.405-620.168
Q1 2022-60.429-549.99-610.419
Q2 2022-188.438-445.061-633.499
Q3 2022-300.502-404.76-705.262
Q4 2022-210.386-396.451-606.837

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q4 2022 there was a net direct investment position of -€210.4bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€396.5bn. The overall net IIP balance is -€606.8bn.

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)
Q3 2020941.211155.5292.027177781791528.73686424139939
Q4 2020978.8081128.4262.280426804848359.10028659389273
Q1 20211066.0681193.2772.506219115478569.53248910353589
Q2 20211107.3021200.0992.9198899667841310.4862182203302
Q3 20211164.4371212.9062.6970115171537810.1780352310896
Q4 20211270.81231.5632.737330815234510.4666996329055
Q1 20221175.8921236.3212.8462647930252110.8772721647533
Q2 20221099.6681288.1063.1806872619736110.9758824196145
Q3 20221099.0521399.5543.3033013906530411.0220112978849
Q4 20221110.3991320.7853.4421860970696112.5872871057742

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 2022 the annual rate of return on FDI investment in Ireland was 12.6% compared to 3.4% on FDI investment abroad.