EU FDI flows fell sharply in 2004

The European Union (EU)'s foreign direct investment (FDI) to other countries fell by a quarter to 99 billion euros in 2004, compared to 132 billion in 2003, while FDI into the 25-country bloc dropped by more than half, from 125 billion in 2003 to 58 billion in 2004.

According to EU's statistical office Eurostat which published the figures on Friday, these falls were strongly influenced by EU flows with the United States.

In 2004 the EU recorded disinvestment of 17 billion euros in the United States, compared to investment of 48 billion in 2003, while US investment in the EU fell by nearly 80 percent from 50 billion in 2003 to 11 billion in 2004.

Excluding the United States, EU investment in other extra-EU countries grew by 37 percent, from 84 billion in 2003 to 116 billion in 2004, while investment from other extra-EU countries in the EU fell by 37 percent, from 75 billion in 2003 to 47 billion in 2004.

Britain, with outflows of 24 billion euros, and a 25 percent share of the EU total, was the largest investor in extra-EU in 2004, followed by Luxembourg (16 billion or 16 percent) and Spain (7 billion or 7 percent).

With regard to extra-EU inflows, Luxembourg, with 16 billion, and a 27 percent share of the EU total, was the main recipient of FDI, ahead of Britain (10 billion or 18 percent) and Belgium (9 billion or 15 percent).

Eurostat said the predominant role of Luxembourg in EU FDI is mainly explained by the importance of its financial intermediation activity.

In 2004, the EU was a net investor in the rest of the world, with outflows higher than inflows by 41 billion euros (0.4 percent of GDP).

Source: Xinhua