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FDI in EU-27 falls for third year

Evropa

  12:41

FDI for the EU-27 shows sharp drop in 2010, with investments down significantly from the US, Switzerland and offshore locations

The economic crisis had a large impact in foreign direct investment (FDI) both out of and into the EU-27 in 2010. Investments from the EU-27 into the rest of the world fells 62 percent compared with the previous year, from €281 billion in 2009 to €107 billion in 2010. Investments into the EU-27 fell even sharper, by 75 percent, from €216 billion to €54 billion, according to Eurostat, the EU’s statistical arm.

“This continues the trend of recent years, with EU-27 outflows in 2010 standing at more than five times lower than in 2007, and inflows around eight times lower,” Eurostat said in a press release. “The strong fall in EU-27 investments in the rest of the world in 2010 is explained by the significant declines recorded with the offshore financial centers (from €89 billion in 2009 to €21 billion in 2010), the USA (from €79 billion to €12 billion) and Switzerland (from €44 billion to disinvestment of €7 billion).”

The US was the main source of investment into the EU-27, although it was down from €97 billion euro in 2009 to €28 billion in 2010. Investments also decreased significantly from Switzerland, from €25 billion to €6 billion, and offshore financial centers, from €46 billion to a disinvestment of €4 billion. Offshore financial centers include 38 entities such as Liechtenstein, Guernsey, Jersey, the Isle of Man, Panama, Bermuda, the Cayman Islands, Bahrain, Hong Kong and Singapore. Investments increased strongly from Canada, Hong Kong and Brazil, and to a lesser extent from Japan and China.

Not all figures dropped. “Investments increased strongly from Canada (from €12 billion to €28 billion), Hong Kong (from €1 billion to €11 billion) and Brazil (from €0.4 billion to €4 billion), and to a lesser extent from Japan and China,” Eurostat said.

Luxembourg, with an outflow of €38 billion euro, was the largest investor outside the EU-27 in 2010, followed by Belgium (€36 billion), Germany (€29 billion) and France (€23 billion). Luxembourg (€48 billion) was also the main recipient of FDI inflows from outside the EU-27, ahead of the United Kingdom (€28 billion), Ireland (€21 billion) and Germany (€14 billion). “The role of Luxembourg in EU FDI is mainly explained by the importance of its financial intermediation activity,” Eurostat pointed out.

In 2010 as in previous years, the EU-27 was a net investor in the rest of the world, with outflows higher than inflows by €53 billion. Belgium, with net investment of €38 billion, was the largest net investor outside the EU-27 in 2010, followed by Sweden (€22 billion), the Netherlands (€19 billion), France (€15 billion) and Germany (€14 billion). “With inflows higher than outflows by €16 billion, the United Kingdom was the largest net recipient of FDI from outside the EU27, followed by Ireland (14 € billion) and Luxembourg (€9 billion),” Eurostat concluded.

According to figures from the Czech National Bank (ČNB), the Czech Republic saw an increase in FDI in 2010, attracting €5.12 billion compared with €2.11 in 2009. These figures, though, include investment into the Czech Republic from other countries in the EU, which has been the main source of FDI. Investment in 2010 from the EU was at €5.26 billion, and countries in the rest of the world taken on the whole disinvested. The US, for example, disinvested €29.35 billion, and Japan disinvested €29.28 billion.

The bulk of the Czech Republic’s outward investment was also into other EU countries, accounting for €1.23 billion of the total €1.28 billion invested in 2010. In the previous year, the Czech Republic invested €694 million into the world as a whole, with €719 million invested in the EU and some overall disinvestment outside the EU.