Archive:Foreign direct investment statistics
FDI flows return to decline in 2012
EU Foreign Direct Investment (FDI) is still affected by the global economic and financial turmoil. In 2012, EU outward flows declined sharply, down 53 % compared with 2011, and recorded their lowest level since 2004. Similarly, EU inward flows decreased from the previous year — down 34 %, to the lowest level since 2005. In this way, 2012 EU FDI flows stood at more than 60 % below the record peaks of 2007 in both inward and outward investment relations with the rest of the world.
In 2010, total FDI outflows decreased by 8 %, mainly due to a sharp decline in 'equity capital', though partially compensated by an increase in 'reinvested earnings'. In 2011, they recovered slightly, up 18 %, again due to recovery in equity capital invested outside the EU.
EU inward flows declined in 2010 by 22 % but recovered partially in 2011, up 13 %. 'Other capital' contributed the most to the positive change, together with reinvested earnings.
The income return from both EU outward and inward investment in 2011 was slightly down from the previous year but remained above the levels of 2008-2009. Provisional figures for 2012 show that EU investment vis-à-vis the rest of the world decreased, partially confirming the lasting impact of the global economic crisis. As in earlier years, FDI flows channelled through Special Purpose Entities (SPE)[1] played a very significant role in the results for 2012.
In 2009-2011 EU FDI flows were still affected by the global economic and financial crisis. In 2011, both outward and inward flows showed signs of recovery. After the slight decrease in 2010, the EU investment abroad grew mainly due to the improved FDI activity with some traditional partners — the United States (up 87 % to EUR 123.5 billion) and Canada (moving from disinvestment in 2010 to investment of EUR 29.3 billion in 2011). The Central American countries (EUR 39.7 billion) also contributed to the positive change mainly due to the increased EU FDI activities with Offshore Financial Centres (OFC) located in this area, where SPEs play an important role. In 2011, the EU invested more in Asia (EUR 80.8 billion) but not only in its main partner countries.
The USA remained the most important player also in the EU incoming investments in 2011. The US flows (EUR 150.2 billion) into the EU doubled from the previous year to account for almost two thirds of total EU inward FDI in 2011. In fact, this compensated the shrunk investment from other traditional EU partners like Switzerland, Canada, Brazil and the OFC. The Asian investors retained their FDI in the EU at the level of the previous year.
Provisional figures for 2012 show a big downturn in the EU flows in both directions. Many large partners were strongly involved in this development.
The EU investment into the USA shrank eight-fold from the preceding year, while outward FDI in Switzerland and Japan dropped into disinvestment. The EU flows in Canada, Brazil, India and OFC halved in 2011. A slight increase in the EU investment activity was registered in Russia (EUR 9.4 billion) and Hong Kong (EUR 9.8 billion).
The US investment into the EU was down 34 % in 2012 but still remained the main source of incoming FDI. The inward flows from the OFC also marked a sharp decline in 2012, while Switzerland, Brazil and India recorded disinvestment in the EU that year. After the 2011 sharp drop, the FDI from Russia and Canada returned back to their 2009 levels.
Whereas the EU overall investment activity with the other economies in South-East Asia have been less affected by the crisis during 2009-2011, there is no indication of a recovery in 2012.
The EU FDI with Australia remains very volatile throughout the studied period. In 2011, this partner attracted only 0.4 % (EUR 1.4 billion) of EU total FDI abroad and represented 1.2 % (EUR 2.9 billion) of total EU inward flows.
EU’s main sources of outgoing FDI
FDI flows can vary considerably from one year to another, influenced mainly by large mergers and acquisitions. In 2010-2012, Luxembourg had the largest share (32 %) of EU FDI outward flows because Special Purpose Entities (SPEs)1 handle most of Luxembourg’s total direct investment. SPEs also play an important role in other EU Member States, especially the Netherlands, Austria, Hungary and Cyprus, but the data presented here exclude SPEs from these countries.
Luxembourg's outgoing FDI halved in 2012 compared with 2011, though Luxembourg remained the leading EU investor in non-EU countries. The OFC were the top destination of FDI from Luxembourg, showing the importance of the financial sector for this country. Unlike previous years, the USA and Switzerland were not among the three top receivers of Luxembourgish FDI in 2012.
In 2012, the United Kingdom recorded a sharp drop in FDI in its traditional partner, the United States, though its investment increased in Canada, Switzerland and the OFC.