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The decrease in euro area net financial outflows in 2018: foreign direct investment retrenchment and portfolio investment slowdown

Author

Listed:
  • Fidora, Michael
  • Schmitz, Martin

Abstract

This box analyses recent developments in the financial account of the euro area balance of payments. In 2018, the euro area recorded net financial outflows of 2.7% of GDP amid an overall decline in gross cross-border financial flows. Portfolio investment, particularly in debt securities, continued to be affected by the Eurosystem’s asset purchase programme. At the same time, the euro area recorded a retrenchment in foreign direct investment flows, mainly reflecting transactions vis-à-vis the United States, most likely linked to the US tax reform. JEL Classification: F21, F32

Suggested Citation

  • Fidora, Michael & Schmitz, Martin, 2019. "The decrease in euro area net financial outflows in 2018: foreign direct investment retrenchment and portfolio investment slowdown," Economic Bulletin Boxes, European Central Bank, vol. 4.
    • Handle: RePEc:ecb:ecbbox:2019:0004:1
    Note: 491968
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2019/html/ecb.ebbox201904_01~0574afd433.en.html
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    More about this item

    Keywords

    Balance of payments; financial account; foreign direct investment; portfolio investment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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