The Estonian current account was in deficit in the first quarter
The current account of the Estonian balance of payments was in deficit by 112 million euros, or 2.3% of GDP, in the first quarter of 2016. The current account balance has been negative in the first quarter of the year for seven consecutive years now. This is mainly because of seasonal factors, as the foreign trade surplus for services is usually smaller then as exports of travel and transport services are lower, and the net outflow of income transfers is the largest of the year because of the large payments made to the budget of the European Union. The deficit on the current account was more than double what it was a year earlier, mainly because of the increase in the deficit on the goods account. The balance of the goods and services account was down from its surplus of 133 million euros a year ago to a surplus of 28 million euros. Exports of goods and services were down 1%, but imports were up 1%.
- The goods deficit was 226 million euros in the first quarter, and it increased mainly because imports of goods grew by 2% while exports shrank by 1% at the same time. The deficit was increased most by machinery and equipment, transport vehicles, and mineral products. Imports of goods crossing the Estonian border were 322 million euros larger than exports going the other way. Estonian merchants earned 96 million euros from the intermediation of goods in third countries. The turnover of goods under merchanting was down over the year by more than a quarter and was 14% of the total turnover on the goods account, having been 19% a year earlier.
- The surplus in services was 253 million euros, which is 12% less than in the first quarter of 2015. Exports fell by 4% and imports by 1%. The decline in the services surplus was mainly due to transport services, exports of which were down 8% while imports were up 4%. As the volume of construction services bought in has been steadily shrinking recently, the surplus in construction services increased. Exports of most types of services were again larger than imports, but that surplus is shrinking because of continuing growth in imports.
- The net outflow from investment and other income was 140 million euros, which is a quarter less than in the previous year. This was because the net outflow of direct investment income declined, with direct investment income from Estonia for non-residents and that from abroad of residents both down. There was a preference for withdrawing earned income as dividends, meaning that reinvested income was smaller than usual. The agricultural subsidies from the European Union were somewhat larger than in the first quarter of 2015, but the net inflow of labour income contracted.
The surplus on the capital account was 28 million euros, which was one quarter the size of that in the same quarter last year. The sharp drop came about mainly because large amounts were realised in the first quarter last year from the sale of emissions quotas, but not this year. Equally, large infrastructure projects were completed at the end of last year, so less support was received and used from the European Union Structural Funds.
The net total of the current and capital accounts, or net lending (+) or borrowing (-), was a deficit of 84 million euros. This means that the Estonian economy was a net lender to other countries, which it has not been for a long time. A more detailed commentary on the statistics on foreign financing can be found on the Eesti Pank website.
1 Net flow is 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.
Current account, % of GDP
Net lending (+) and net borrowing (-) / total current and capital account, % of GDPEesti Pank will release the statistics for the balance of payments and the external debt for the second quarter of 2016 together with an economic policy and statistical comment on 8 September 2016 at 08.00.
Eesti Pank accompanies the release of statistics on the balance of payments, the international investment position and the external debt with a separate statistical comment and an economic policy explanation.
The balance of payments statistical comment focuses on description of the current account and the capital account. The statistical comment on external financing gives more depth on the financial account, the investment position and the external debt (see External sector statistics).
Eesti Pank Statistics Department
Telephone: 668 0894
Email: Reet.Kirt [at] eestipank.ee