The current account deficit shrank over the past year as a whole from 1.8% of GDP in the previous year to 1%. The reduction in the current account deficit was mainly driven by a reduction in outflows of income.

Spending to increase fixed capital and inventories last year was slightly less than in 2012 as a share of GDP at close to 27%, according to initial estimates. Together with the decline in outflows of income, this facilitated an improvement in the external balance.

The largest impact on the current account came from the decrease in profits of foreign-owned companies in the first half of last year and as outflows of income in the balance of payments reflect not only distributed profit but also reinvested earning, the decline in profits meant the current account deficit also declined. Although the profits of foreign-owned businesses started to improve, they didn't do so by enough to counterbalance the decline in the first half of the year.

Having reached 3% of GDP immediately after the boom, the surplus on the current account quickly turned into a small deficit. No such major changes are expected in the coming years. The Eesti Pank December forecast put the current account deficit for the year for 2014-2015 at 1.5-2% of GDP. As before the boom, the balance of the current account may be quite different during shorter periods in these years under the impact of individual large investment projects.

See also: The Estonian balance of payments, international investment position and gross external debt for the fourth quarter of 2013.

Photographs of spokespeople from Eesti Pank can be found in the photo bank at www.eestipank.ee/press/fotopank

Additional information:
Hanna Vaga
Public Relations Office
Eesti Pank
Eurosystem
Tel: 6 680 959, 5 097 285
Email: [email protected]
Press enquiries: [email protected]