• The current account indicates more investment activity than earlier
• The key economic indicators are distorted by large individual transactions
• There were no major changes in the funding of the economy from abroad

The current account deficit in the first quarter was 35 million euros, or 0.6% of GDP, which is not unusual. The causes of the current account deficit in the first quarter were mainly seasonal. The foreign trade surplus for services is usually smaller at the start of the year as exports of travel and transport services are lower, and the net outflow^[1] of income is the largest of the year because of the large payments made to the budget of the European Union. Exports of transport services did grow quite quickly in the first quarter of this year, but the deficit on the goods account was almost twice what it was a year earlier. Increasing growth in imports of goods is a typical sign of higher levels of activity in investment. Excluding the very large one-off import transactions in the transport sector at the start of last year, foreign trade statistics show that imports of capital goods were almost 8% larger in first quarter of this year than a year earlier. Recently published statistics for economic growth indicate a fall of 8% in investment in the first quarter, though they also reveal that that figure was severely impacted by one-off transactions, without which investment would have grown by around 3%. Though investment activity has increased of late, the general level of investment remains low in historical terms and in comparison with other European countries.

Investment in Estonia was somewhat larger than investment abroad from Estonia. The net inflow of investment was mainly due to the banking system and foreign aid from the European Union to the general government. Direct investment in Estonia fell for the second consecutive quarter, though the changes were quite small. Equity investment was down, while dividend payments by credit institutions meant that reinvested income in Estonia also fell, which is quite unusual. The reduction in equity was offset by the direct investment in debt, though not fully.

Eesti Pank publishes an economic policy comment on external sector statistics, together with a statistical release on the balance of payments that covers changes in the current and capital accounts, the financial account, the international investment position, and the external debt.

Eesti Pank will release the statistics for the balance of payments and the external debt for the second quarter of 2018 together with an economic policy and statistical comment on 6 September 2018 at 08.00.

For further information:
Eva Vahur
Public Relations Office
Eesti Pank
Tel: 668 0965, 533 00619