Moderate increase in foreign direct investment of multinationals in 2014
29.04.2016 | Deutsche Bundesbank DE
In 2014, Germany's primary foreign direct investment stocks (outward FDI) and foreign direct investment stocks in Germany (inward FDI) rose only moderately on balance.
German corporate assets abroad
Claims from outward FDI rose significantly to just under €1.3 trillion in total, for which an increase in primary investment capital (+€78 billion) was primarily responsible. Loans to German FDI companies abroad and to foreign affiliates of German companies remained virtually unchanged (€248 billion). However, liabilities from lending by foreign investment enterprises to their German investors and to affiliates of German companies increased by a total of €40 billion.
Taking into account exchange rate effects, outward FDI was up by €43 billion to €956 billion at the end of 2014. Since the end of 2013, the euro has depreciated against many major currencies; against the US dollar, for example, it was down by 12 %. This led to higher amounts when converting the foreign assets into euro. For this reason, in particular, two-thirds of the growth (+€29 billion) was attributable to outward FDI stocks in the United States, which were up to €181 billion at the end of 2014. There was a different scenario in China, where corporate assets were up sharply by almost one-quarter to €59 billion, mainly as a result of an effective increase in investment. The role of the renminbi's marked appreciation against the euro was of lesser importance.
Owing to M&A activity, just over 550 German-held equity interests were captured in the statistics for the first time, mainly in the EU countries, but also in the United States. They raised FDI stocks by around €6 billion. By comparison, it is striking that the only 300 first registrations attributable to start-ups (greenfield investments) achieved almost three times the amount of outward FDI (€14.5 billion). Particularly noteworthy are the 62 start-ups in the United States and 32 newly established enterprises in China, which were included for the first time.
Foreign corporate assets in Germany (inward FDI)
Inward FDI increased only slightly by €5 billion to €666 billion at the end of 2014. While the investment capital of foreign investors in Germany still recorded a growth of €38 billion, loans to affiliates of foreign enterprises in Germany, in particular, declined by €21 billion. At the same time, lending by foreign direct investment enterprises in Germany to their foreign investors and affiliates increased by a total of €11 billion.
During the reporting year 2014, 180 mergers and acquisitions involving foreign investors in Germany with FDI stocks of €16 billion and just over 150 cross-border start-ups in Germany involving €11 billion worth of inward FDI were reported for the first time. However, these new investments and the increase in existing direct investment enterprises were, on balance, largely offset by liquidations and a reduction in FDI lending.
If inward FDI is not allocated to primary investor countries but to the country of domicile of the group's headquarters, significant shifts between the EU member states and the other countries occurred also at the end of 2014. The decline in inward FDI from well-known holding locations such as the Netherlands (by €104 billion to €40 billion) and Luxembourg (by €84 billion to €45 billion) is particularly noticeable here. At the same time, this allocation to the ultimate investor resulted in an almost threefold increase in US corporate assets in Germany to €155 billion and, in the case of the United Kingdom, a €26 billion rise to €93 billion. €47 billion of the primary inward FDI in Germany ultimately originated with investors in Germany ("round-tripping").
Detailed results for outward and inward FDI broken down by country and economic sector as well as methodological notes can be found in the Special Statistical Publication 10 "Foreign direct investment stock statistics".