Mariadolores Schiavone
- 29 June 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2023Details
- Abstract
- This box provides an analysis of the retrenchment recorded in euro area external financial flows in 2022 – the largest since the global financial crisis – making use of new, more granular data published in the euro area balance of payments and international investment position statistics. The retrenchment was most pronounced in portfolio and foreign direct investment (FDI) flows. Euro area investors’ retrenchment in portfolio investment in 2022 was mainly driven by investment funds, while insurance corporations and pension funds offset the reversal in outflows to some extent. As regards foreign portfolio investment in the euro area in 2022, net purchases of euro area investment fund shares dried up almost completely, while foreign investors’ appetite for euro area debt securities started to return. The retrenchment in FDI mainly reflected “financialised” transactions by multinational enterprises vis-à-vis affiliated “other financial institutions” in euro area financial centres, while FDI flows to the non-financial corporate sector remained more stable.
- JEL Code
- F32 : International Economics→International Finance→Current Account Adjustment, Short-Term Capital Movements
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics