The current account of the Estonian balance of payments was in surplus in the third quarter of 2015 by 159 million euros, or 3.1% of GDP, which is 73% more than in the third quarter of 2014. The growth in the surplus was driven mainly by the primary income account, which reflects labour and investment income, and which saw its deficit shrink by around 40%¹, and by the services account, which was positive by the largest amount ever. The balance of the goods and services account was in surplus by 255 million euros as both exports and imports fell by 5%.

The goods account had a deficit of 274 million euros, which was more than one tenth larger than a year earlier. The deficit widened mainly because exports of goods fell by 7% while imports fell at a slower 5%. The goods account has two components, cross-border trade in goods and trade within third countries of goods under merchanting, the first of which recorded 336 million euros more in imports than in exports, while the second recorded 63 million euros earned from intermediation of goods. The turnover of trade in goods under merchanting made up 17% of the total turnover on the goods account.

The services surplus increased by 3% to a record 530 million euros. The positive balance of services increased because imports shrank faster than exports did. The reduction in imports of services was largely due to a drop of two thirds in imports of construction services as renovation projects came to an end in the energy sector. Travel and transport services provided a substantial 65% of the surplus from services. The turnover and surplus from travel services increased a little, but those from transport services were down.

The net outflow from investment and other income² was 168 million euros, or about 40% less than in the third quarter of 2014. The main reason for this was a decline in the outflow of direct investment income. The net outflow of direct investment income was mainly due to reinvested income. Somewhat more was received from the European Union institutions in production subsidies and other support than a year ago. The net inflow of labour income remained at the same level as last year.

The surplus in the capital account increased by more than 40%, mainly because of investment support transfers from the European Union’s Structural Funds, and stood at 98 million euros.

The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a surplus of 257 million euros. This means that the Estonian economy was a net lender to other countries in the third quarter. This was reflected in the portfolio investment of the financial account of the balance of payments, as other financial intermediaries and the general government bought large amounts of long-term debt securities.

Eesti Pank will release the statistics for the balance of payments and the external debt for the fourth quarter of 2015 and the full year 2015 together with an economic policy and statistical comment on 10 March 2016.

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

² 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.

Background Information

From this year Eesti Pank is accompanying the release of balance of payment and external debt statistics with a separate statistical comment and an economic policy explanation.

The balance of payments statistical comment focuses on analysis 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).

For further information:
Reet Kirt
Eesti Pank Statistics Department
Telephone: +372 668 0894
Email: [email protected]