New results of the foreign direct investment stock statistics

The latest edition of our Special Statistical Publication 10 “Foreign direct investment stock statistics” provides important results on cross-border capital links until year-end 2009.[1] The data increasingly reflect location and restructuring decisions of large multinational enterprises. Furthermore, it was important in 2009 that despite the still difficult economic situation worldwide and the global decline in the number of mergers and acquisitions, German investors’ regional diversification allowed them to benefit from their foreign affiliates’ significantly improved profitability compared with the previous year. However, the number of employees in direct investment enterprises was still falling on both sides of the capital links.

German primary direct investment stock abroad rose sharply by €37 billion to reach €892 billion between the end of 2008 and the end of 2009. The increase focused mainly on the members of the European Monetary Union and was predominantly in the form of equity capital. By contrast, foreign investors reduced their primary direct investment stock in Germany by €6 billion to €651 billion over the same period. This was effected exclusively through a net decline of €9 billion in intragroup loans. As a result, the changes in direct investment stocks led to an increase of €44 billion in the Federal Republic of Germany’s net external assets. Year on year, in 2009 loss-making enterprises – especially in the banking sector – were able to considerably reduce annual losses both in German direct investment enterprises abroad and in foreign direct investment enterprises in Germany (by €17 billion each). Annual profits increased by a total of €8 billion in Germany’s foreign affiliates, whereas the balance sheets of the participating interests of foreign investors in Germany again showed a slight decline in annual profits (-€2 billion).

During the period under review, a similar development in direct investment stocks can also be observed if the consolidated aggregate of primary and secondary foreign direct investment [2] is considered. As calculated in this way, German foreign direct investment stock increased by €31 billion to €985 billion. While the primary direct investment stock increased almost exclusively in euro-area member states, it is still abundantly clear that Luxembourg and the Netherlands are preferred sites for holding companies and that the real direct investment enterprises are located in other EU countries – particularly in the UK – and in America (mostly in the United States and in Brazil). Primary and secondary foreign direct investment in Germany decreased by €10 billion to €470 billion as at the end of 2009.

Footnotes:

1. The annual Special Statistical Publication 10 “Foreign direct investment stock statistics” is available on our website (www.bundesbank.de under Statistics/Publications). Our Press Office also provides a printed form as a supplement to our April 2011 Statistical Supplement “Balance of payments statistics”.
2. With respect to cross-border affiliates, holding companies are of major importance (more than two-fifths of primary German direct investment at the end of 2009 related to holding companies abroad and just under two-thirds of primary foreign direct investment was focused on holding companies in Germany). Primary direct investment in dependent holding companies is excluded from this consolidation and are replaced by the participating interests of these holding companies in order to identify those direct investment enterprises that are economically relevant.