Home > Statistics > Balance of payments and international investment position > 2016 > April > Current account in deficit in the first quarter, net capital inflow to Finland

Published: 15 June 2016

Current account in deficit in the first quarter, net capital inflow to Finland

The current account was in deficit in the first quarter of 2016 and in April. In January to April, the combined exports of goods and services decreased by six per cent year-on-year, which was a continuation of the decrease seen in the second half of 2015. There was net capital inflow to Finland and the net international investment position decreased in the first quarter. The data appear from Statistics Finland's statistics on balance of payments and international investment position.

Current account and trade account

Current account in the first quarter

The current account showed a slight deficit, EUR 0.2 billion, in the first quarter of 2016. The deficit was generated from the goods, service and secondary income accounts.

Exports of goods in balance of payment terms, EUR 12.4 billion, declined by eight per cent in the first quarter from the corresponding period in the year before, and imports by six per cent. In balance of payment terms, the trade account turned EUR 0.1 billion into deficit, as exports of goods declined faster than imports of goods.

The service account showed a deficit of EUR 0.2 billion in the first quarter. Exports of services remained at previous year's level at EUR 5.4 billion.

The primary income account was EUR 0.8 billion in surplus in the first quarter, which is mainly explained by the surplus of investment income. The primary income account includes investment income like interest rates and dividends. The secondary income account was EUR 0.7 billion in deficit.

Current account in April 2016

In April 2016, the current account deficit was EUR 0.7 billion as all sub-items of the current account were in deficit. Exports of goods in balance of payment terms decreased by 11 per cent from twelve months back. April was the ninth consecutive month when exports of goods in balance of payment terms decreased from the corresponding month in the year before. Imports of goods in balance of payment terms increased by four per cent in April.

The goods account in balance of payment terms was in balance when in April 2015, the goods account was EUR 0.7 billion in surplus. The service account showed a deficit of EUR 0.1 billion in April 2016. Of the other sub-items, the primary income account was EUR 0.4 billion in deficit, while in April 2015, the deficit was EUR 1.6 billion.

Export and import figures in balance of payments terms by service item and area can be found in the new quarterly publication on international trade in goods and services .

Current account and trade account, 12 –month moving sum

Financial account and net international investment position

Capital flowed to Finland in the first quarter of 2016

In the first quarter of 2016, net capital inflow to Finland amounted to EUR 5.6 billion. Inward capital flow was mostly in the form of other investments, i.e. loans, deposits and trade credits, EUR 9.8 billion in net. Net capital inflow to Finland in the form of portfolio investments totalled EUR 7.4 billion. Net capital outflow was largest in the form of direct investments, EUR 12.4 billion.

Table 1. External assets and liabilities by investment type, EUR billion

	Opening positiion 31.12.2015	Financial transactions 2016 Q1	Price changes 2016 Q1	Changes in the exchange rates and valuation adjustments 2016 Q1	Closing position 31.03.2016
Financial account	-8,0	-5,6	4,8	-1,3	-10,1
Assets	697,8	26,5	30,1	-10,0	744,4
Liabilities	705,8	32,1	25,2	-8,6	754,5
Direct investment	4,8	12,4	-0,8	-0,7	15,7
Assets	129,6	15,6	-1,0	-4,5	139,7
Liabilities	124,9	3,2	-0,2	-3,9	124,0
Portfolio investment	-6,4	-7,4	4,9	-0,8	-9,7
Assets	291,3	7,6	-2,1	-3,5	293,3
Liabilities	297,7	15,0	-7,0	-2,6	303,1
Other investment	-18,8	-9,8	0,7	0,6	-27,3
Assets	167,4	27,0	0,6	-1,5	193,5
Liabilities	186,2	36,8	0,0	-2,2	220,8
Financial derivatives	3,2	-0,9	-0,1	-0,1	2,1
Reserve assets	9,2	0,0	0,2	-0,2	9,2

Direct investment assets grew

During the first quarter of 2016, foreign direct investment assets increased by EUR 10.1 billion and liabilities decreased by EUR 0.9 billion. At the end of the first quarter, foreign direct investment assets on gross stood at EUR 139.7 billion and the corresponding liabilities at EUR 124.0 billion.

Before the growth in direct investment assets that took place in the first quarter of this year, the net international investment position of direct investments had declined starting from 2013.

Portfolio investment liabilities grew more than assets

At the end of the first quarter of 2016, outward portfolio investment assets stood at EUR 293.3 billion, of which EUR 144.0 billion were investments in equity and investment fund shares, and EUR 149.4 billion in bonds and money market instruments. During the quarter, EUR 0.4 billion were added to foreign investments in equity and investment fund shares and EUR 7.2 billion to debt securities. Holding losses (the effect of changes in prices, exchange rates and other valuation changes) decreased portfolio investment assets by EUR 5.6 billion in the first quarter.

At the end of the first quarter, outward portfolio investment liabilities stood at EUR 303.1 billion, of which EUR 104.2 billion were investments in equity and investment fund shares, and EUR 198.9 billion in bonds and money market instruments. Portfolio investment liabilities grew by EUR 5.4 billion in the first quarter. Foreign investors increased their investments in Finnish equity and investment fund shares by EUR 11.5 billion and in debt securities by EUR 3.6 billion. In the first quarter changes in prices decreased portfolio investment liabilities by EUR 7.0 billion and other valuation changes by EUR 2.6 billion.

Other investment liabilities increased more than assets

In the first quarter of 2016, net capital inflow to Finland of other investments, i.e. loans, deposits and trade credits amounted to EUR 9.8 billion. At the end of March, assets from other investments amounted to EUR 193.5 billion and liabilities to EUR 220.8 billion. Financial institutions held EUR 166.0 billion of these assets and EUR 190.6 billion of the liabilities.

Financial derivatives -related investments declined

At the end of March, Finland had EUR 2.1 billion in derivative-related net assets, which is EUR 1.1 billion less than at the end of December. Price changes increased derivative-related assets and liabilities in the first quarter.

The net international investment position decreased — both assets and liabilities grew

At the end of March 2016, Finland had EUR 744.4 billion in foreign assets and EUR 754.5 billion in foreign liabilities. Thus the net international investment position was negative at the end of the quarter as liabilities exceeded assets by EUR 10.1 billion. Both foreign assets and liabilities increased in the first quarter.

At the end of December 2015, the net investment position was EUR 8.0 billion negative so the net decrease was EUR 2.1 billion. During the first quarter, assets grew by EUR 46.6 billion and liabilities by EUR 48.7 billion. Price changes related to foreign assets and liabilities raised the net investment position by EUR 4.8 billion during the quarter. Changes in exchange rates and other valuation changes in turn decreased the net investment position by EUR 1.3 billion.

When examining the net investment position at sector level, the foreign assets of investment funds, social security funds and households were higher than their liabilities. Non-financial corporations, monetary financial institutions, central government and local government had more foreign liabilities than assets.

Financial account and international investment position in April 2016

In April, the outward capital flow from Finland was EUR 9.4 billion on net. The outward capital flow was highest in portfolio investments, EUR 4.2 billion.

Finland's net international investment position was positive at the end of April, as foreign assets amounted to EUR 752.9 billion and foreign liabilities to EUR 747.7 billion.

The data for May 2016 will be published on 15 July 2016.

International investment position monthly

Source: Balance of payments and international investment position, Statistics Finland

Inquiries: Tapio Kuusisto 029 551 3318, Saana Ranta-Ruona 029 551 3375, balanceofpayments@stat.fi.

Director in charge: Ville Vertanen

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Appendix tables

• Appendix table 1. Finland's current account, quarterly 2016, EUR million (15.6.2016)
• Appendix table 2. External assets and liabilities by sector, quarterly 2016, EUR million (15.6.2016)
• Appendix table 3. International investment position by sector, quarterly 2016, EUR million (15.6.2016)
• Appendix table 4. Finland's balance of payments 2016, EUR million (15.6.2016)

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Updated 15.6.2016