Foreign investment up 50% in a year

There has been a 50% rise in the level of foreign investment in Ireland this year, it was revealed today.

New statistics showed Ireland was the main beneficiary of a Europe-wide increase in inward investment in the first six months of the year.

Ireland enjoyed growth of 50%, almost twice the European average of 27% between January and June, compared to the same period last year.

Des McCann, Head of Project Finance at Ernst & Young Ireland, said the state’s figures were very encouraging.

“While traditional locations for foreign direct investment in Europe such as France and Spain continue to see a fall-off in investment figures, Ireland continues to hold its share at around 3%,” he said.

“Given the continued trend towards the East, this remains a very credible performance.

“Ireland continues to benefit from investment in traditional areas such as computing and software.”

Of the 42 projects announced in Ireland this year, 73% were expansions by existing foreign companies based in Ireland, while the remaining 27% were new Greenfield sites.

The Irish market share of total foreign direct investment in Europe was 3% for the first six months of 2004, in comparison to 2% in 2003.

The largest percentage of investment went to the UK, with 22% of total European investment.

Manufacturing was the main investment activity in Ireland with 11 projects accounting for 26% of the total investment for the period.

Mr McCann said the results so far for 2004 indicate a return to significant growth across the continent following several years of decline in inward investment.

The most striking trend to emerge was exceptionally strong growth in Eastern Europe.

The Big Four of Hungary, Czech Republic, Poland and Russia saw a major increase in project numbers from 156 in 2003 to 283 this year, a total of 20% of all investment.

“If the growth of foreign investment in the East is maintained, the FDI map of Europe will be fundamentally altered,” Mr McCann said.

“While there is a natural drift eastwards as those markets open and lower-cost possibilities present themselves, it seems at this stage of the recovery, there is plenty to go around for both East and West Europe.”

The USA remained the largest investing country in Europe, showing good growth, up from 332 in the first half of 2003 to 396 projects in 2004, a total of 28% of all projects.

Japan, the UK and Germany were the next largest outward investing countries. If the growth trend for early 2004 continues, it is expected that Asia will be among the top five outward investors.

The data is from the first six months of an annual European Investment Monitor report on foreign direct investment, commissioned by Ernst & Young.