International Accounts Q4 2022

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.

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.

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.

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.

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.

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.

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.

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.

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.