Andres Saarniit, economist of Eesti Pank

Estonia’s export growth remained brisk in the third quarter of 2011, while domestic demand was weak owing to the prevailing uncertainty. Consequently, the current account posted another large surplus of around 7% of the third-quarter GDP, which is comparable to the previous year's level.

Growth has so far been mainly driven by the export sector, but in 2011 also domestic demand has increased its contribution to growth, and thus the current account surplus should have contracted. However, this has not been the case because of two factors. First, the outflow of investment income as a ratio of GDP was smaller than it was a year ago, since the profits of foreign-owned companies operating in Estonia have grown slower than Estonian investors' incomes abroad. Second, cash flows from the EU budget were larger than they were in the previous year. As a result, the current account surplus as a ratio of GDP remained almost unchanged from a year ago.

The current account surplus followed an upward trend throughout 2011, but will soon start to decrease gradually. Usually, third-quarter surpluses tend to be higher or deficits lower due to seasonal factors, which does not apply to the entire year. For instance, the current account surplus for the third quarter of 2010 was around 7% of GDP, although the annual average was only 3.6%.

Given that the current account remained in surplus in the third quarter, the external liabilities continued to shrink. The net external debt-to-GDP ratio dropped to 9% in the third quarter.

Estonia's Balance of Payments and International Investment Position are available on the website of Eesti Pank.