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Foreign Direct Investment

Foreign Direct Investment

Direct Investment Income Outflows increased by €5.1bn in Q1 2023

Online ISSN: 2565-6384
CSO statistical publication, , 11am
InflowsOutflows
Q4 20207.51724.079
Q1 20219.85637.438
Q2 202110.43536.917
Q3 20214.14730.142
Q4 202112.00132.684
Q1 20229.38243.715
Q2 202212.51644.069
Q3 20224.40643.059
Q4 202214.76843.81
Q1 202311.03848.869

Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €48.9bn in the first quarter of 2023, an increase of €5.1bn compared with the fourth quarter of 2022. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €11bn in the first quarter of 2023, a decrease of €3.7bn from the previous quarter.

Income on Debt OutflowsReinvested Earning OutflowsDividends & Distributed Branch Profits Outflows
Q4 20202.49216.245.347
Q1 20212.551-1.08935.976
Q2 20212.29826.0978.521
Q3 20212.33514.0413.767
Q4 20212.07513.65416.955
Q1 20222.50812.7128.497
Q2 20222.57635.9345.559
Q3 20223.03522.21617.809
Q4 20223.6888.64531.477
Q1 20233.528-8.90654.247

The composition of direct investment income outflows is presented in Figure 5.2. Income outflows on reinvested earnings were -€8.9bn in the first quarter of 2023, a decrease of €17.6bn compared with the fourth quarter of 2022. Dividends & distributed branch profits outflows at €54.2bn were up €22.8bn on the previous quarter while income on debt outflows at €3.5bn were down €160m.

Direct Investment Income Outflowsof which Manufacturingof which Information and Communications
Q4 202024.07914.8295.9
Q1 202137.43826.2257.809
Q2 202136.91721.4039.987
Q3 202130.14220.2184.896
Q4 202132.68420.5377.718
Q1 202243.71532.1956.942
Q2 202244.06927.19511.302
Q3 202243.05931.4786.717
Q4 202243.8126.90911.098
Q1 202348.86933.20110.082

Figure 5.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €48.9bn in direct investment income outflows in the first quarter of 2023, €33.2bn can be attributed to the manufacturing sector and €10.1bn to the information and communications sector. Manufacturing sector income outflows increased by €6.3bn while information and communications sector income outflows decreased by €1bn when compared to the previous quarter.

AbroadIn Ireland
Q4 202019.67414.319
Q1 2021-0.419-18.21
Q2 202113.6246.355
Q3 2021-2.291-8.541
Q4 202136.55717.071
Q1 20228.148-7.249
Q2 2022-4.516-28.786
Q3 2022-14.7357.526
Q4 202220.0254.713
Q1 202310.5672.02

Foreign direct investment (FDI) transactions abroad and in Ireland are shown in Figure 5.4. Direct investment into Ireland increased by €2bn in the first quarter of 2023. Direct investment abroad increased by €10.6bn in the quarter.

Please note that today 12/10/2023 an amendment has been made to the text under Figure 5.4.

 Original text: Direct investment into Ireland decreased by €2bn in the first quarter of 2023. Amendment:  Direct investment into Ireland increased by €2bn in the first quarter of 2023.

AbroadIn Ireland
Q4 20201030.2061152.175
Q1 20211111.5061214.33
Q2 20211152.1091222.012
Q3 20211208.0931234.366
Q4 20211315.2131257.422
Q1 20221206.9521237.281
Q2 20221137.9751298.829
Q3 20221136.1681375.358
Q4 20221125.1811283.664
Q1 20231156.5811259.948

The stock of FDI assets held abroad increased from €1,125.2bn in Q4 2022 to €1,156.6bn in Q1 2023, while the stock of FDI assets held in Ireland decreased from €1,283.7bn in Q4 2022 to €1,259.9bn in Q1 2023. FDI assets held in Ireland by foreign investors decreased by €23.7bn. FDI assets held abroad by Irish investors increased by €31.4bn.

Net Direct Investment IncomeAll Other Current Account ComponentsCurrent Account Balance
Q4 2020-16.56214.756-1.806
Q1 2021-27.58244.54416.962
Q2 2021-26.48242.93816.456
Q3 2021-25.99548.29822.303
Q4 2021-20.68324.4943.811
Q1 2022-34.33350.37516.042
Q2 2022-31.55345.35813.805
Q3 2022-38.65348.2519.598
Q4 2022-29.04244.18615.144
Q1 2023-37.83151.40213.572

The impact of foreign direct investment income on the current account balance is shown in Figure 5.6. In Q1 2023 net direct investment income (FDI income inflows less FDI income outflows) was -€37.8bn while the net of all other current account components (trade in merchandise, services and other income) stood at €51.4bn. The resultant balance was a current account surplus of €13.6bn.

Net Direct Investment TransactionsAll Other Financial Account ComponentsFinancial Account Balance
Q4 20205.3554.8110.167
Q1 202117.791-6.6411.152
Q2 20217.26917.80525.074
Q3 20216.257.44613.696
Q4 202119.486-12.2527.233
Q1 202215.3971.97417.37
Q2 202224.27-12.59111.677
Q3 2022-22.26130.9238.66
Q4 202215.312-1.66513.647
Q1 20238.5471.2119.759

The impact of direct investment transactions on the financial account balance is shown in Figure 5.7. In Q1 2023 there were net flows of €8.5bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was €1.2bn. This contributed to a financial account surplus of €9.8bn.

Net Direct Investment PositionAll Other Net IIP ComponentsNet IIP
Q4 2020-121.969-497.083-619.052
Q1 2021-102.824-522.877-625.701
Q2 2021-69.903-510.404-580.307
Q3 2021-26.273-559.042-585.315
Q4 202157.791-626.001-568.21
Q1 2022-30.329-504.693-535.022
Q2 2022-160.854-426.986-587.84
Q3 2022-239.19-400.697-639.887
Q4 2022-158.483-432.674-591.157
Q1 2023-103.367-454.485-557.852

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 5.8. In Q1 2023 there was a net direct investment position of -€103.4bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€454.5bn. The overall net IIP balance is -€557.9bn.

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)
Q4 20201030.2061152.1752.027070314092528.93119534792892
Q1 20211111.5061214.332.26395539025439.44174977147892
Q2 20211152.1091222.0122.8678710087326810.6035783609326
Q3 20211208.0931234.3662.6450778209955710.4163594914312
Q4 20211315.2131257.4222.770577845565710.9097025501383
Q1 20221206.9521237.2812.9798202414014811.5946175525204
Q2 20221137.9751298.8293.3433071904040111.5958297820575
Q3 20221136.1681375.3583.3714204237401511.8897770616814
Q4 20221125.1811283.6643.6502571586260313.6058189682035
Q1 20231156.5811259.9483.6943370157386314.270985786715

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 5.9. 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 Q1 2023 the annual rate of return on FDI investment in Ireland was 14.3% compared to 3.7% on FDI investment abroad.