Archive:Foreign direct investment statistics

In 2011, EU-27 FDI flows showed signs of recovery following the recent financial and economic crisis. Outward flows of FDI increased for the first time in four years, rising by 154 % when compared with 2010. At the same time, inward flows of FDI also more than doubled compared with the previous year — up 117 %. Nevertheless, despite the large increases in EU-27 FDI flows in 2011, these gains only partially compensated the considerable declines that were recorded during the crisis (2008 to 2010). As a result, EU-27 FDI flows with the rest of the world still remained, in 2011, well below their record peaks of 2007 for both inward and outward flows.

In 2011, EU-27 investment vis-à-vis the rest of the world (extra-EU-27 flows) increased, which may reflect the start of a global economic recovery. FDI flows channelled through special purpose entities (SPE)[1] played a significant role (as in previous years) when analysing the results for 2011.

In 2009, EU-27 FDI outflows dropped by 17 %, mainly due to a decrease of ‘other capital’. This pattern continued and strengthened in 2010, as outflows fell by a further 54 %, as a result of a sharp drop in equity capital invested outside the EU-27.

Following a slight recovery in 2009, EU-27 inward flows declined sharply in 2010, falling by 56 % compared with the year before, mirroring the losses that were recorded for outflows (see Figure 1). Equity and other capital both contributed to the negative development in 2010, while reinvested earnings continued to follow a positive trend (a pattern that has been observed since 2008).

The rate of return on FDI stocks for both EU-27 outward and inward investment rose in 2010 when compared with the previous year, but remained well below the record levels of 2007 (see Figure 3).

During the period 2008 to 2010, EU-27 FDI flows were largely affected by the global financial and economic crisis. In 2010, both outward and inward flows of FDI halved when compared with the previous year. As in 2009, the decline in EU-27 investment abroad was mainly due to a sharp drop in transactions with the EU-27’s main partners — the United States (down 75 % to EUR 20.9 billion) and Switzerland (down to EUR 0.9 billion — for the purpose of this article a billion is defined as a thousand million). In 2010, outward flows of FDI to offshore financial centres (OFC) also fell sharply to EUR 5.3 billion, in part due to disinvestment in central America, where some OFCs are located.

The same three partners (the United States, Switzerland and OFCs) also played a prominent role when analysing the development of inward FDI flows into the EU-27 in 2010. Flows from the United States and Switzerland declined by 51 % and 67 % respectively, while OFCs recorded a disinvestment of EUR 7.8 billion. SPEs played an important role in all of these developments.

On the other hand, there was some evidence of new partners gaining in importance for EU-27 investment. For example, EU-27 FDI outflows to Brazil tripled from 2008 to 2011 and in 2010, Brazil became the main destination for EU-27 outflows of FDI, ahead of the United States (see Table 1).

Provisional figures for 2011 show signs of a recovery in EU-27 outflows to all of the EU’s main partners, aside from Russia, where the EU-27 recorded a disinvestment of EUR 2.3 billion. EU-27 FDI with the United States, Switzerland and OFCs grew substantially, to account for 54 % of total outflows to the rest of the world in 2011 and for 73 % of total inflows.

Outward FDI to Canada dropped into disinvestment in 2010, but recovered in 2011 when investment of EUR 12.4 billion was recorded. In 2010, Canada was the second largest investor in the EU-27 (EUR 23.9 billion), but this figure was down to EUR 6.8 billion in 2011.

EU-27 investment flows with economies in South-East Asia were less affected by the financial and economic crisis. There were indications of a recovery in investment levels in 2010, except for Japan, where the EU-27 recorded disinvestment in both directions (inward and outward FDI). Preliminary results for 2011 show that levels of EU-27 FDI rose further, with China (EUR 17.5 billion) and India (EUR 12.0 billion) being the main destinations for outward FDI, and Hong Kong (EUR 6.5 billion) and Japan (EUR 5.4 billion) being the main sources of inward FDI.

In 2010, Australia attracted 10 % (EUR 14.9 billion) of the EU-27’s total investment abroad, but withdrew (disinvestment) some EUR 1.9 billion of FDI from the EU-27, reversing the pattern of bilateral FDI relations that had been recorded in 2009.