International Accounts Q4 2023

Direct investment income outflows (earned on investments in Ireland by investors located abroad) were €37bn in the fourth quarter of 2023, a decrease of €5.8bn compared with the third quarter of 2023. Direct investment income inflows, which represent income earned abroad by investors located in Ireland, were €18.8bn in the fourth quarter of 2023, a decrease of €973m from the previous quarter.

The composition of direct investment income outflows is presented in Figure 4.2. Income outflows on reinvested earnings were €21.7bn in the fourth quarter of 2023, an increase of €8.8bn compared with the third quarter of 2023. Dividends & distributed branch profits outflows at €11.5bn were down €14.9bn on the previous quarter while income on debt outflows at €3.8bn were up €318m.

Figure 4.3 illustrates a breakdown of direct investment income outflows between two sectors, manufacturing and information and communications. Of the €37bn in direct investment income outflows in the fourth quarter of 2023, €16.9bn can be attributed to the manufacturing sector and €12.4bn to the information and communications sector. Manufacturing sector income outflows decreased by €5.2bn while information and communications sector income outflows increased by €1.4bn 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 €6.6bn in the fourth quarter of 2023. Direct investment abroad increased by €13.2bn in the quarter.

The stock of FDI assets held abroad increased from €1,166.9bn in Q3 2023 to €1,209.4bn in Q4 2023, while the stock of FDI assets held in Ireland increased from €1,262.5bn in Q3 2023 to €1,276.1bn in Q4 2023. FDI assets held in Ireland by foreign investors increased by €13.6n. FDI assets held abroad by Irish investors increased by €42.5bn.

The impact of foreign direct investment income on the current account balance is shown in Figure 4.6. In Q4 2023 net direct investment income (FDI income inflows less FDI income outflows) was -€18.2bn while the net of all other current account components (trade in merchandise, services and other income) stood at €17.8bn. The resultant balance was a current account deficit of €382m.

The impact of direct investment transactions on the financial account balance is shown in Figure 4.7. In Q4 2023 there were net flows of €6.5bn in foreign direct investment transactions while the net contribution from other financial account components (portfolio investment, other investment and reserve assets) was -€6.7bn. This contributed to a financial account deficit of €146m.

The net stock of foreign direct investment assets in the net international investment position (IIP) is shown in Figure 4.8. In Q4 2023 there was a net direct investment position of -€66.7bn. Other net IIP components (portfolio investment, other investment and reserve assets) accounted for -€467.6bn. The overall net IIP balance is -€534.2bn.

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 as FDI income divided by FDI positions. The return on investments in Ireland is significantly higher than the return on investments made abroad. In Q4 2023 the annual rate of return on FDI investment in Ireland was 13.5% compared to 5.5% on FDI investment abroad.