EU-wide investment falls
Data released by the European Union statistical service Eurostat show that Cyprus attracted EUR 1 bln (about CYP 588 mln) of foreign direct investment (FDI) in 2004, up from EUR 0.9 bln in 2003 while it invested EUR 0.5 bln worth of FDI abroad, the same level as in 2003.
Half of the inward FDI came from other EU member states, while 40% of outward investment made by Cyprus was to other member states.
Different data
The data cited above are more or less in line with statistics published by the Central Bank of Cyprus, which reports CYP 537 mln of inward investment in 2004 and CYP 295 mln (around EUR 0.5 bln) of outward investment.
Sharp-eyed readers will notice that these numbers differ from those we reported last week from the Ministry of Commerce, which cited EUR 360 mln over 5 years.
The Ministry phoned us after the article appeared to explain that the difference boils down to methodology. The Central Bank measures FDI on the basis of capital flows, whereas the Ministry of Commerce figures relate only to equity participation.
Since plenty of money can be invested in Cyprus without involving share ownership, this explains the difference.
Central Bank data show that inward FDI to Cyprus has averaged CYP 569 mln per year since 2000.
FDI into Europe falls
In 2004, FDI into the EU25 from non-EU countries fell by more than half to EUR 58 bln from EUR 125 bln in 2003.
Luxembourg was the largest recipient of non-EU FDI, at EUR 16 bln, or 27% of the EU25 total. The UK was second at EUR 10 bln (18%) and Belgium third at EUR 9 bn (15%). Eurostat reported that the predominant role of Luxembourg in both inflows and outflows is mainly explained by its importance as a financial centre.
Outward FDI by EU25 countries to non-EU countries also fell, by a quarter, to EUR 99 bln.
On the outflow side, the UK, with outflows of EUR 24 bln euro (25%), was the largest investor in the extra-EU25 in 2004, followed by Luxembourg at EUR 16 bln (16%) and Spain at EUR 7 bln (7%).
Eurostat reported that falls in both inflows and outflows were strongly influenced by EU25 flows with the US.
In 2004 the EU25 recorded disinvestment of EUR 17 bln euro in the US, compared to investment of 48 bn in 2003, while US investment in the EU25 fell by nearly 80% from EUR 50 bn in 2003 to EUR 11 bn in 2004.
Fiona Mullen
