The current account surplus was large for the second quarter



  • The current account surplus was smaller than that of a year ago
  • Exports from the main branches of services other than transport services are at record levels
  • Flows of direct investment were in balance

The surplus on the current account of the balance of payments was 104 million euros in the second quarter, or about 2% of GDP of the same quarter. This meant the surplus was almost half the size it was in the same quarter of the previous year, which was because deficits were larger on both the goods and income accounts. One factor driving the growth in the deficit on the income account was the income tax paid to the Estonian state in the second quarter of 2015 on super dividends paid out, as this made the reference base lower than usual. Looking back further, the current account has mostly been close to balance in the second quarter or in deficit, so the surplus is still significant. As the current account can also be interpreted as net saving in the economy, a positive balance now is an indication of generally low investment activity. However, goods imports increased by 6% in the second quarter. Foreign trade statistics show imports of capital goods increased further and VAT declarations to the Tax and Customs Board show that fixed capital formation was 11% more than a year earlier. These data indicate that investment activity may have increased.

Exports of services stand out for their broad-based growth. The adjusted data for the balance of payments show exports of travel services increased in the first quarter of the year by 9% over the previous year. Similar growth continued in the second quarter and exports of business services, communications services and construction services also grew. Export volumes are close to record levels in all the largest sectors apart from transport services. At the same time, the growth of 6% in imports of services came almost entirely from imports of other business services.

Flows of direct investment were in balance, unlike in the preceding quarters. The outflow of investment increased mainly because of intra-group loans issued by non-financial companies. These may be a consequence of calculated investment decisions, or they may be for normal intra-group liquidity management. The inflow of direct investment was largely supported by the reinvestment of profits earned in Estonia, but the amount of capital invested in equity capital also increased, having previously declined for two quarters. Direct investment in equity capital means that new money was coming into the country. It is possible that this will support an improvement in the capacity for investment in the economy.

Background Information

Eesti Pank compiles external sector statistics that include data on the balance of payments, foreign debt, the international investment position and foreign exchange reserves. Eesti Pank releases an economic policy comment and two statistical reviews on them:

1.  a balance of payments comment that focuses on explaining the changes in the current and capital accounts of the balance of payments;

2. a statistical comment on external financing that covers the financial account of the balance of payments, 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 third quarter of 2016 together with an economic policy and statistical comment on 9 December 2016 at 08.00.

For further information:
Ingrid Mitt
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