Net foreign direct investment (FDI) in Cyprus remained positive in 2021, although it fell to 10.5 billion euros from 12 billion euros in 2020, according to data released by the Central Bank of Cyprus (CBC).
Net FDI stock declined in 2021 as “outward FDI declined more than inward FDI,” the CBC said.
Outward FDI reached EUR 399,313.8 million in 2021, compared to EUR 410,565.7 million in 2020, as “a decrease in equity with a slight increase in debt instruments.”
In 2021, the majority of outward FDI consisted of capital (91%) and, to a lesser extent, debt instruments (9%), the CBC said. It is noted that the composition of outward FDI does not change much over time, and capital always remains above 90%.
In addition, FDI stock was €388.814.7 million in 2021, compared to €398.295.1 million in 2020, with the decline mainly due to a “decrease in equity and, to a lesser extent, a decrease in debt instruments,” CBC added. .
According to the CBC, the changes in FDI inward and outward are similar due to the large share of special purpose entities in both inbound and outbound FDI.
“Because these organizations have little to no interaction with the domestic economy, their assets to non-residents are very similar to their respective liabilities,” the CBC said in a statement. Outward FDI in Europe in 2021 amounted to 235.119.6 million euros compared to 241.211.0 million euros in 2020, the Americas became the second most important continent with foreign investment of 116.717.5 million euros compared to the corresponding amount of 122.924, 6 million euros in 2020.
It should be noted that there is an amount of €39.998.7 million that relates to unallocated data (i.e. data that cannot be attributed to a specific country) in 2021.
“Regarding the euro area and the European Union (excluding the UK), the share of FDI destined for these groups was 10.7% and 11.9% respectively in 2021,” the CBC said in a statement.
Europe also had the largest share of outward FDI with €235.119.6 million in 2021 compared to €241.211.0 million in 2020, followed by the Americas with an outward FDI value of €116.717.5 million compared to the corresponding amount in in the amount of 122.924.6 million euros in 2020.
According to the CBC, inward FDI from Europe reached €321,930.4 million in 2021, up from €323,145.0 million in 2020, with inward FDI from the Americas (the second most important continent in terms of FDI inward) amounted to € 39,399.0 million, which is 5,505.6 million euros less than in the previous year.
In addition, the service sector (tertiary sector) attracted the highest volume of inward FDI: €387,649.6 million in 2021 compared to €397,088.4 million a year earlier in 2020, with financial and insurance services accounting for the lion’s share.
“This reflects the specialization of Cyprus in the provision of financial services,” the CBC said in a statement. In addition, outward FDI to the tertiary sector in 2021 amounted to EUR 200,067.5 million, compared to EUR 199.436.2 million in the previous year, with most of the investment directed to financial and insurance activities.