Insider / ΚΥΠΕ
The net position of Foreign Direct Investment (FDI) for 2020 remained positive, although it showed a decrease compared to 2019.
Specifically, according to the FDI version published on Wednesday by the Central Bank of Cyprus and which includes 2020 data, recently ratified by Eurostat, the net FDI position in 2020 amounted to € 10,499.1 million, compared to € 12,270.6 million in 2019.
This is due to the fact that outgoing FDI decreased more than inward FDI, the CBC notes.
The stock of outgoing FDI reached € 399,313.8 million in 2020, compared to € 410,565.7 million in 2019 with the decrease, according to the CBC, attributed to the reduction of equity securities while the debt instruments recorded a small increase.
The majority of stocks of outgoing FDI in 2020, consisted of equity securities (91%) and, to a lesser extent, debit instruments (9%).
Regarding the reductions in the outflows of outgoing and incoming FDI in 2020, these “are mainly due to reductions recorded in exchange rate changes and, to a lesser extent, in reductions from other changes,” the CBC notes.
In addition, the CBC states that the stock of incoming and outgoing FDI in Cyprus is scattered on all continents, with Europe being the dominant partner.
Cyprus's outgoing FDI stockpile in 2020 was spread across at least 134 countries, while inbound FDI stocks were channeled to Cyprus from at least 159 countries. Of these, 123 are common to both outgoing and incoming FDI.
According to the CBC, net FDI transactions in 2020 were negative while in 2019 they were slightly positive.
Specifically, net FDI transactions in 2020 were recorded at – € 3,863.9 million, as the level of FDI incoming transactions that were positive exceeded the level of outgoing FDI transactions which were also positive.
In terms of outgoing FDI transactions for 2020, they amounted to € 223.6 million, of which – € 10,516.2 million were reinvested earnings, while inward FDI transactions amounted to € 4,087.6 million in 2020 , consisting mainly (€ 4,804.0 million) of equity securities excluding reinvested earnings.
Net FDI revenues continued to be negative in 2020 (ie revenues from FDI inflows exceeded revenues from FDIs).
Specifically, net FDI revenues were recorded at – € 800.8 million in 2020, recording a decrease from – € 396.4 million last year.
The income from the outgoing FDI, this amount amounted to € 14,129.6 million in 2020, compared to € 15,002.5 million in 2019, while the revenues corresponding to incoming FDI amounted to € 14,930.4 million in 2020, against € 15,398.8 million in 2019.
Analysis by country
Outgoing FDI inventories destined for Europe amounted to € 235,119.6 million in 2020, compared to € 241,211.0 million in 2019, according to the CBC.
The second most important continent in value was America, with the value of the outgoing investment amounting to € 116,717.5 million, reduced from the corresponding amount of € 122,924.6 million in 2019.
The CBC notes that, for 2020, an amount of € 39,998.7 million refers to unallocated items (ie items that can not be distributed geographically).
For the euro area and the European Union (outside the United Kingdom), the share of FDI earmarked for these groups of countries in 2020 was 10.7% and 11.9%, respectively.
With regard to incoming FDI, these, according to the CBC, are channeled mainly from Europe and, to a much lesser extent, from America.
More specifically, the stock of FDI inflows from Europe reached € 321,930.4 million in 2020, reduced compared to € 323,145.0 million in 2019. The incoming stock of FDI from America (the second most important continent in terms of incoming FDI) was recorded at € 39,399.0 million, thus recording a decrease of € 5,505.6 million in 2019. The unallocated amount was recorded at € 9,631.6 million.
The share of outgoing FDI from the euro area and the European Union (outside the United Kingdom) is much higher than the corresponding share of outgoing FDI in 2020, representing 27.1% and 28.2%, respectively. .
By economic activity
Most of the incoming FDI stocks of Cyprus were channeled to the tertiary sector (ie Services).
Specifically, according to the CBC, the stocks of incoming FDI channeled to the tertiary sector in 2020 amounted to € 387,649.6 million, down from € 397,088.4 million in 2019.
“Most of the investments in the tertiary sector concern financial and insurance services. “This reflects the specialization of Cyprus in the provision of financial services”, underlines the CBC.
Regarding the primary and secondary sector, total investments amounted to € 1,162.9 million in 2020, compared to € 1,206.3 million in 2019.
As for the outgoing FDI, they are channeled mainly to the tertiary sector.
Specifically, the outflows of FDI in the tertiary sector amount to € 200,067.5 million in 2020, compared to € 199,436.2 million in the previous year.
Most of the investments in the tertiary sector are related to financial and insurance activities.
The primary and secondary sectors amounted to € 143,794.9 million in 2020, from € 154,938.1 million in 2019.
According to the CBC, an amount of € 55,451.5 million in the outgoing FDI of 2020 remains unallocated (that is, it can not be allocated to a specific economic activity).
The stock of outgoing FDI (adjusted) in 2020 reached € 17,510.4 million, while the corresponding stock of incoming FDI (adjusted) was recorded at € 41,000.0 million in the same year.
Finally, the CBC notes that the presence of “special purpose entities” (SPEs), ie their classification as residents of Cyprus) in FDI statistics, distorts the picture presented by these statistics and adds that this is due to the fact that their transactions and their positions, as a whole, are “cross-border”.
He also states that the analysis in this section treats SPEs as non-residents in order to remove the effect they have on FDI statistics.