The current account of the Estonian balance of payments was in surplus in the first quarter

  • The current account surplus was 99 million euros in the first quarter of 2017, or around 2% of GDP. The surplus was supported by an increase in the positive balance of exports and imports of services and a reduction in the negative balance of income received and paid.
  • The net outflow of capital shown in the financial account[1] was 222 million euros, which mainly reflected investments by pension funds in foreign debt securities.
  • The international investment position showed that at the end of the first quarter the external liabilities of Estonian residents exceeded their external assets by 7.7 billion euros, or 36% of GDP.
  • The debt claims on non-residents in contrast were 2.3 billion euros larger than the debt liabilities to them, which were equal to 11% of GDP. The volume of debt liabilities shrank by 266 million euros in the quarter, and the volume of debt liabilities by 137 million.

The current account of the Estonian balance of payments was in surplus by 99 million euros in the first quarter of 2017. This was due to growth in the surplus on the services account and a reduction in the negative balance on the secondary income accounts. The surplus in services was 346 million euros, which was around 30% more than in the first quarter of 2016. The surplus was mainly increased by computer services and other business services. The net outflow of income was 75 million euros, which is half as much as in the same quarter of the previous year. This was mainly because of a reduction in the net outflow of direct investment income and smaller payments into the European Union budget. The goods deficit decreased by 16% to 172 million euros. Exports and imports increased for most groups of goods other than machinery and equipment.

The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a surplus of 123 million euros in the first quarter of 2017. This means that the Estonian economy continued to be a net lender to other countries.

The financial account of the balance of payments shows that investment abroad from Estonia was 222 million euros larger in the first quarter of 2017 than investment in Estonia from abroad. The net capital outflow was primarily a consequence of investments in foreign securities by pension funds. The net outflow of investment through the banking system[2] was 236 million euros and occurred through growth in client deposits. This allowed banks to invest those funds in liquid foreign assets. The growth in client deposits came mainly from the general government, which sold foreign securities that it was holding. The growth in the deposits of the other sectors came from the surplus on the current account. Unlike in the fourth quarter of 2016, the outflow of direct investment was larger than the inflow. This was because of large dividends paid by credit institutions to their parent banks.

The net international investment position at the end of the first quarter of 2017 showed that the external liabilities of Estonian residents exceeded their external assets by 7.7 billion euros, or 36% of GDP. During the quarter the investment position moved in the direction of net balance by 165 million euros.

Statistics for the external debt show that at the end of the quarter, the debt claims of Estonian residents on non-residents were 2.3 billion euros larger than their debt liabilities. Both debt assets and debt liabilities shrank during the quarter.

For more detail on the financial account, the international investment position and the external debt see the external sector statistics.

Figure 1. Current account, % of GDP

Figure 2. Structure of the financial account, % of GDP

Eesti Pank will release the preliminary balance of payments, international investment position and external debt for the second quarter of 2017 together with an economic policy comment and a statistical comment on 7 September 2017 at 08.00.


Background Information

Eesti Pank accompanies the release of statistics on the balance of payments, the international investment position and the external debt with a separate statistical release and an economic policy explanation.

The statistical release on the balance of payments describes the main changes in the balance of payments, the international investment position and the external debt. The release is independent of economic policy releases and is presented separately from them.

Additional information:
Andres Lauba
Eesti Pank Statistics Department
Telephone: 668 0725
Email: andres.lauba [at] eestipank.ee

[1] Net flow is inflow minus outflow. If the inflow exceeds the outflow, there is a net inflow, if the outflow exceeds the inflow there is a net outflow.
[2]  The banking system covers credit institutions and Eesti Pank.