Ireland drops down FDI ranking as investment here fell faster than key rivals during pandemic

martin shanahan IDA Ireland

Sarah Collins

April 30 2021 10:42 AM

Foreign investment in Ireland collapsed last year as the Covid-19 crisis took its toll.

Flows of foreign direct investment (FDI) into Ireland fell by 40pc, or $48bn (€40bn), in 2020 compared to 2019, figures from the Organisation for Economic Cooperation and Development (OECD) show.

The fall is around twice the rate seen in the UK and Canada, although not as high as the drop in flows to the US and The Netherlands, the OECD said.

Ireland had the EU’s largest inflows of FDI in 2019, but dropped below Luxembourg and Germany in 2020.

The US is by far the largest investor in Ireland.

The Central Statistics Office has said that more than a third of foreign direct investment is simply passing through Ireland en route to subsidiaries in other countries.

FDI inflows to most countries tanked last year, falling by 70pc in the EU, the OECD said.

“The pandemic accelerated a steady decline and contributed to sinking global FDI flows to their lowest levels since 2005,” the OECD said in its ‘FDI in figures’ report on Friday.

However, equity inflows to Ireland turned positive in 2020 as a result of various cross-border mergers and acquisitions, the OECD said.

Paddy Power parent company Flutter Entertainment’s buyout of American gambling giant FanDuel Group was one of the highest-value acquisitions last year, with the merger of financial firms Aon and Willis Tower Watson also boosting the figures.

Meanwhile, outflows of investment from Ireland were negative in 2020 at -$49bn (-€41bn) the OECD said on Friday, almost three times the negative flows recorded in 2019.

The CSO said last year that the decrease in direct investment into and out of Ireland was impacted significantly by corporate restructuring in 2020.

Overall, global FDI flows decreased by 38pc in 2020, their lowest level since 2005, the OECD said.

Inflows to the OECD area decreased by 51pc, while outflows were down by 48pc, largely influenced by major divestments by companies in the Netherlands.

China overtook the United States as the top destination for FDI worldwide in 2020, with India and Luxembourg coming in next place.

Luxembourg, the US and Japan were the largest sources of FDI outflows.