Direct investment in Q2 2021
Direct Investment in Q2 2021 (Joint press release by the Bank of Lithuania and Statistics Lithuania).
The Bank of Lithuania and Statistics Lithuania publish the provisional data on direct investment (DI) for Q2 2021. According to the latest data release:
the flow of foreign direct investment (FDI) in Lithuania was positive and amounted to €266.8 million in Q2 2021 (see Chart 1). The dominant FDI flows in Lithuania were observed in case of Hong Kong (€132 million), German (€79.9 million) and Curacao (€74 million) capital companies, while the largest decline in flows came from the United Kingdom (-€155.8 million) investment companies. In terms of economic activities, the highest increase was observed in investment in manufacturing (€123.4 million). The flow of FDI in companies engaged in wholesale and retail trade; repair of motor vehicles and motorcycles also increased (€64.4 million), whereas investment in electricity, gas, steam and air conditioning supply activities shrank (-€30 million);
FDI income from non-resident investment amounted to €650.5 million in Q2 2021 and was 30.4% higher year on year. Dividends amounted to €557.1 million. Most income from FDI was earned by Hong Kong (€132.5 million), Sweden (€112.3 million) and Estonia (€89.6 million) investors;
cumulative FDI in Lithuania rose by 4.1% over the year and amounted to €24.6 billion or 48% of GDP on 30 June 2021. FDI per capita amounted to an average of €8,825 (on 30 June 2020 – to €8,437). Germany (€5.6 billion), Sweden (€3.9 billion), Estonia (€2.8 billion), the Netherlands (€2.1 billion) and Luxembourg (€1.4 billion) were among the five largest investors. The largest share of FDI was attracted by companies engaged in financial and insurance activities (€9.5 billion), manufacturing (€3.4 billion) and real estate transactions (€2.5 billion);
in Q2 2021, the flow of Lithuania’s DI abroad was positive and amounted to €334.6 million (see Chart 2), as a result of investment in debt instruments (€257.4 million). In terms of economic activities, investment in professional, scientific and technical activities constituted a significant share (73.4% or €245.7 million);
DI income earned by Lithuanian investors abroad amounted to €86.5 million during the period under review. The majority of these (75%) were reinvested earnings. Most income was earned from companies engaged in wholesale and retail trade; repair of motor vehicles and motorcycles (€30.8 million);
Lithuania’s cumulative DI abroad declined by 0.1% over the year and stood at €8.9 billion on 30 June 2021. Lithuania’s DI in the Member States of the European Union accounted for 50.1%, while in the United States of America – for 43.8% of Lithuania’s total DI abroad. The largest share of Lithuania’s cumulative DI abroad (55% or €4.9 billion) went to companies engaged in professional, scientific and technical activities.
|Chart 1. FDI flow in Lithuania|
|Chart 2. Lithuania’s DI flow abroad|
It should be noted that, when calculating data for Q2 2021, data for Q1 2019-Q1 2021 were revised. The DI indicators for this period were significantly influenced by the inclusion in the statistics of special purpose entities (SPEs) established in Lithuania in 2019-2020 by non-residents, i.e. limited companies created to fulfil narrow, specific or temporary objectives and to isolate a financial risk, a specific taxation or a regulatory risk. The physical existence of these companies is limited, they are controlled directly or indirectly by non-residents, do not have or have a limited number of employees (up to 5) and do not produce (and do not provide services) in the country of establishment. With the growth of multifaceted and flexible multinational enterprise (MNE) structures, which are becoming increasingly global by seeking to obtain benefits from different legal and tax regimes, SPEs are becoming increasingly widespread, leading to a significant increase in cross-border financial flows and positions related to SPEs. This is observed in Lithuania in 2019 and 2020. In the DI flows and positions, the investment jumps caused by SPEs stand out: FDI from Germany and Luxembourg and DI from Lithuania to the United States of America (see Charts 1 and 2).
Detailed data on DI is available on the Bank of Lithuania website under External statistics. Use the My Data Sets tool to create your own data sets, which are saved in your account and automatically updated as soon as they are published.