Net Foreign Investment stock of Cyprus remain positive in 2019

The net Foreign Direct Investment (FDI) stock of Cyprus decreased in 2019, albeit still remaining positive.

According to data released Tuesday by the Central Bank of Cyprus, in 2019, net FDI stock reached €8,200.9 million, compared with €15,404.2 million, in 2018 . This was due to the fact that inward FDI increased more than outward FDI.

Outward FDI stock reached €409,980.3 million in 2019, compared with €394,276.8 million in 2018. The increase was attributed to the increase in equity while debt instruments recorded a small decrease. The majority of outward FDI stock in 2019 comprised of equity (92%) and, to a lesser extent, debt instruments (8%). The composition of outward FDI does not change much over time with equity always remaining above 90%.

Inward FDI stock amounted to €401,779.4 million in 2019, compared with €378,872.6 million in 2018. This development was due to the increase in equity whilst debt instruments decreased. As regards the composition of inward FDI in 2019, it comprised of 81% equity and 19% debt instruments. Similar to outward investment, the composition of inward investment does not change much over time with the equity share of inward FDI ranging between 78% - 86%.

Transactions

Net FDI transactions in 2019 continued to be negative for the fourth consecutive year. In particular, net FDI transactions in 2019 were recorded at -€5,311.8 million, following an increase in inward FDI transactions which surpassed the increase in outward FDI transactions.

As regards outward FDI transactions in 2019, these reached €18,077.1 million, of which, €22,994.1 million was equity other than reinvested earnings. Reinvested earnings as well as transactions in debt instruments, were both negative.

Inward FDI transactions reached €23,388.9 million in 2019, comprising mainly (€22,161.6 million) of equity other than reinvested earnings.

Income

Net income from FDI was marginally negative in 2019,  after six consecutive years of this being positive. More specifically, net FDI income was recorded at -€25.2 million in 2019, down from €347.9 million the previous year.

As regards income from outward FDI, this reached €11,414.9 million in 2019, compared with €23,907.9 million in 2018. The said reduction was mainly due to a decrease in income from equity other than reinvested earnings (dividends) by €10,468.1 million.

Income from inward FDI amounted to €11,440.1 million in 2019, compared with €23,560.0 million in 2018 . The decrease was mainly attributed to the decrease in income from equity other than reinvested earnings by €7,595.3 million and, to a lesser extent, the decrease in reinvested earnings by €4,474.9 million.

The Cyprus FDI stock, both inward and outward, is dispersed in all continents, with Europe being the dominant partner.

Outward FDI stock destined to Europe amounted to €232,216.5 million in 2019, up from €226,895.7 million in 2018.

The outward FDI stock of Cyprus in 2019 was dispersed to at least 135 countries, whilst inward FDI stock was channelled to Cyprus from at least 160 countries. Of these, 123 are common to both outward and inward FDI stock.

Most of Cyprus’s inward FDI stock was channelled to the tertiary sector (i.e. services). In particular, inward FDI stock channelled to the tertiary sector in 2019 amounted to €399,161.5 million, up from €377,037.9 million in 2018. Most of the investments in the tertiary sector are directed to the financial and insurance services. This reflects Cyprus’s specialisation in the provision of financial services. Concerning the primary and secondary sectors, these totalled €1,222.0 million in 2019, compared with €675.8 million in 2018.