The current account of the Estonian balance of payments was in surplus by 77 million euros in the third quarter of 2018. The deficit in goods was 348 million euros, which was the largest of recent years and was 73% more than in the third quarter of 2017. It grew mainly because of a drop in net exports of goods under merchanting and a rise in imports of machinery and equipment, metals and metal products, and pharmaceutical products. The surplus in services was 526 million euros, which was a little less than in the same quarter of the previous year. Turnover of services remained at record high levels though, as exports of services increased by 7% over the year and imports grew by 14%. The net outflow of investment income was 226 million euros, which was 7% less than a year earlier and was mainly due to a reduction in the net outflow of direct investment income from non-financial companies. The surplus on the capital account was 92 million euros, which was 63% more than a year earlier, principally because no emissions quotas were bought in the third quarter of this year, unlike in the third quarter of last year. The volume of investment support remained the same.
The net total of the current and capital accounts, or net lending (+) or borrowing (-), saw a surplus of 169 million euros in the third quarter of 2018. This meant that the Estonian economy was again a net lender to other countries, 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 75 million euros larger in the third quarter of 2018 than investment in Estonia from abroad. The net capital outflow was primarily a consequence of investments in the debt securities of non-financial companies maturing and of investment in foreign securities by pension funds. The net inflow of investment through the banking system[3] was 233 million euros and occurred through a reduction in resident deposits and lending to residents by Estonian banks. This allowed residents to spend more on imported goods and services and to reduce their own liabilities. The inflow of direct investment was 137 million euros bigger than the outflow. This was again based on non-financial companies and credit institutions reinvesting the profits they had earned in Estonia.
The net international investment position at the end of the third quarter of 2018 showed that the external liabilities of Estonian residents exceeded their external assets by 7.3 billion euros, or 29% of the GDP of the previous four quarters.
Statistics for the gross external debt show that at the end of the quarter, the debt assets of Estonian residents on non-residents were 4 billion euros, or 16% of GDP for four quarters, 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.
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:
[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.