The Evolution of Foreign Direct Investment
The Cypriot economy exhibited a notable phenomenon concerning the flows and balances of foreign direct investments (FDI) both entering and exiting. The balance of inward FDI increased from $2.8 billion in 2000 to $260.1 billion in 2010, an increase of more than 91 times. It continued to rise, reaching $425 billion by 2021, but then suddenly dropped to $58.3 billion in 2022, a decrease of 80%.
Conversely, the balance of outward FDI from the Cypriot economy experienced similar fluctuations. It multiplied 435 times, rising from about half a billion dollars in 2000 to $242.6 billion in 2010, and continued to increase to $415.6 billion in 2021. However, it abruptly fell to $25.4 billion in 2022, a 93.9% decrease.
Annual flows of FDI to and from the Cypriot economy also displayed this unusual trend. Inbound investments turned negative in three years of the study period, ranging from a reduction of $35.7 billion in 2021 to $413 million in 2018, reflecting the liquidation and exodus of foreign investments from Cyprus. Meanwhile, the inbound flow in 2019 was approximately $52.3 billion.
Similarly, outbound investments from Cyprus were negative in all years except 2019, indicating the liquidation of Cypriot investments abroad to capitalize on opportunities at home due to the withdrawal of foreign investments from Cyprus.
