Growth in the trade deficit led the current account a short way into negative territory

  • The current account deficit was 35 million euros in the first quarter of 2018, or 0.6% of GDP. The deficit arose from the negative balance of exports and imports of goods and the net outflow of investment income.

  • The net inflow of capital[1] shown in the financial account was 22 million euros. This mainly reflected transfers made through the banking system and external aid received from the European Union.

  • The international investment position showed that at the end of the first quarter the external liabilities of Estonian residents exceeded their external assets by 7.5 billion euros, or 32% of GDP.

  • The debt claims of Estonian residents on non-residents in contrast were 3.3 billion euros larger than the debt liabilities[2] to them, and they were equal to 14% of GDP. The volume of debt claims shrank by 516 million euros in the quarter, and the volume of debt liabilities by 87 million.

The current account of the Estonian balance of payments was in deficit by 35 million euros in the first quarter of 2018. The causes of the deficit were a widening of the deficit on the goods account and a net outflow of investment income. The deficit on the goods account more than doubled over the year to 313 million euros. The deficit in goods was increased primarily because net exports of goods under merchanting declined while imports of mineral goods, various equipment, cars, and metal and metal products increased. The net outflow of investment income was 186 million euros, which was essentially the same as in the first quarter of 2017. As they did a year ago, credit institutions pay dividends to their parent companies. The services surplus increased by 10% over the year to reach 374 million euros. The surplus was mainly increased by computer services and passenger transport by air.

The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a minimal deficit of 9 million euros in the first quarter of 2018, meaning it was essentially in balance.

The financial account of the balance of payments shows that investment abroad from Estonia was 22 million euros smaller in the first quarter of 2018 than investment in Estonia from abroad. The net inflow of investment through the banking system[3] was 170 million euros and it came mainly from reductions in resident deposits and loans granted to residents. This allowed resident non-financial companies to spend more on imports and pension funds to invest in foreign securities. The net inflow of general government investment totalled 120 million euros, which was money received as external aid from the European Union. Unlike in the fourth quarter of 2017, the outflow of direct investment was larger than the inflow. This was because of large dividends paid by credit institutions to their parent banks.

The net international investment position at the end of the first quarter of 2018 showed that the external liabilities of Estonian residents exceeded their external assets by 7.5 billion euros, or 32% of GDP.

Statistics for the gross external debt show that at the end of the quarter, the debt claims of Estonian residents on non-residents were 3.3 billion euros larger than their debt liabilities. Both debt assets and debt liabilities shrank during the quarter.

For more detail on the financial account, the international investment position and the external debt see the external sector statistics.

Figure 1. Current account, % of GDPCurrent account, % of GDP


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

Background Information

 

Eesti Pank accompanies the release of statistics on the balance of payments, the international investment position and the external debt with a separate statistical release and an economic policy explanation.

The statistical release on the balance of payments describes the main changes in the balance of payments, the international investment position and the external debt. The release is independent of economic policy releases and is presented separately from them.

Additional information:
Andres Lauba
Eesti Pank Statistics Department

Telephone: 668 0725

Email: andres.lauba [at] eestipank.ee


  • [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.

  • [2] Debt liabilities are the part of external liabilities which are debts by their nature, meaning that they have to be repaid.

  • [3] The banking system covers credit institutions and Eesti Pank.