• The surplus on the current account of the balance of payments was 108 million euros in the second quarter of 2017, or around 2% of GDP. The surplus was driven by the positive balance of the services account as exports of services exceeded imports, and by the net inflow of secondary income¹ from European Union Structural Funds and fines.
• The Estonian external economy picked up further in the second quarter. The turnover of goods and services was 8.9 billion euros or 153% of GDP, which makes the Estonian economy one of the most open in the euro area.
• The net outflow of capital shown in the financial account was 171 million euros, which again mainly reflected investments by pension funds in foreign securities.
• The international investment position showed that at the end of the second quarter the external liabilities of Estonian residents exceeded their external assets by 7.5 billion euros, or 34% of GDP. The investment position moved in the direction of balance for the fifth consecutive quarter.
• The debt claims on non-residents were 2.5 billion euros larger than the debt liabilities to them though, which is equal to 12% of GDP. The volume of debt liabilities increased by 170 million euros in the quarter, while the volume of debt liabilities shrank by 66 million.

The current account of the Estonian balance of payments was in surplus by 108 million euros in the second quarter of 2017. This was due to growth in the surplus on the services account and a net inflow of secondary income. The surplus in services was 505 million euros, which was 15% more than in the second quarter of 2016. The surplus was mainly increased by travel, computer and construction services. The net outflow of investment income was 266 million euros, which is 50% more than in the same quarter of the previous year. This came mainly from the reinvestment of profits earned in Estonia by foreign direct investors. The goods deficit increased by 30% to 319 million euros. Exports of goods were up by 4% in the second quarter of 2016, while imports were up by 6%. The growth in exports was affected mainly by increased exports of mineral products including oil shale, while the growth in imports was driven by imports of transport vehicles. The surpluses in secondary income and on the capital account were boosted by a substantial increase in European Union investment support.

The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a surplus of 202 million euros in the second quarter of 2017, meaning that the Estonian economy continued to be a net lender to the rest of the world, so the country as a whole invested more financial assets abroad than it received from there.

The financial account of the balance of payments shows that investment abroad from Estonia was 171 million euros larger than investment in Estonia from abroad. The net capital outflow was again a consequence of investments in foreign securities by pension funds. The net outflow of investment through the banking system, which covers credit institutions and Eesti Pank, was 136 million euros and occurred through growth in client deposits, which allowed banks to reduce their own foreign liabilities. Growth in deposits emanated from the current account surplus, as increased exports resulted in a greater inflow of funds to companies, which held them in banks operating in Estonia. The growth in general government deposits was affected by the Structural Funds received from the European Union. Unlike in the first quarter of 2017, the inflow of direct investment exceeded the outflow. The inflow of investment increased because non-financial companies and credit institutions reinvested the profits they had earned in Estonia.

The net international investment position at the end of the second quarter of 2017 showed that the external liabilities of Estonian residents exceeded their external assets by 7.5 billion euros, or 34% of GDP. During the quarter the investment position moved in the direction of net balance by 146 million euros.

Statistics for the external debt show that at the end of the quarter, the debt claims of Estonian residents on non-residents were 2.5 billion euros, or 12% of GDP, larger than their debt liabilities. Debt assets increased during the quarter, while external liabilities decreased.

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

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.

Eesti Pank will release the statistics for the balance of payments, the international investment position and the external debt for the third quarter of 2017 together with an economic policy and statistical comment on 7 December 2017 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: [email protected]