Despite weak foreign demand, Estonia’s balance of payments for the first quarter of 2015 was almost in balance, with a current account deficit of only 13 million euros, which is equal to 0.3% of GDP of the quarter. The balance of the goods and services account, one component of the current account, was in surplus by 131 million euros. Exports were 1% higher than in the first quarter of last year¹, but imports were 4% smaller. The surplus in services has been more than one and a half times the deficit in goods in the past four quarters.

The goods deficit decreased by around one third over the year to 187 million euros. Imports crossing the border into Estonia were 228 million euros more than exports crossing the other way, but the goods bought by Estonian businesses abroad and sold on in third countries were 41 million euros more in value than the goods bought. The turnover of this intermediation trade of goods under merchanting made up 15% of the turnover on the goods account.

The services surplus increased to 319 million euros. Sales of services abroad increased by 3% and purchases of services from abroad fell by 7%. The growth was principally driven by construction, manufacturing services and other business services.

In the first quarter, 144 million euros left the country in net flows of investment and other income². The negative income flow was caused by the large dividends paid out from direct investments to foreign owners, and Estonia’s contribution to the budget of the European Union. The net income of labour income remained at the same level as last year, while there was some increase in the production support from the European Union funds.

The surplus in the capital account increased mainly because of revenues from the sale of emissions quotas and stood at 108 million euros. It was also aided by investment support from the European Union structural funds.

The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a surplus of 95 million euros. This means that the Estonian economy was a net lender to other countries in the first quarter. This was reflected in the net outflow of capital from the financial account of the balance of payments, as non-financial companies put their money in foreign deposits and pension funds invested in foreign shares and fund units.

¹ All comparisons have been drawn on an annual basis, if not indicated otherwise.

² Net flow = 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.

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, on which Eesti Pank publishes two statistical press releases:

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 the financial account of the balance of payments, the international investment position and the external debt in a separate review of foreign financing.

Alongside these two statistical reviews, Eesti Pank publishes an economic policy comment that analyses the causes of the changes shown in the external sector statistics.

Eesti Pank will release the next statistics for the balance of payments and the external debt with a statistical and economic policy comment on 8 September.  

Reet Kirt
Eesti Pank Statistics Department
Telephone: +372 668 0906
Email: [email protected]