Current account showed a deficit in the third quarter, net international investment position strengthened

The current account was in deficit in the third quarter of 2018. The value of goods exports in balance of payment terms increased by 3 per cent and the value of service exports by 5 per cent. The net exports of goods and services turned into deficit as imports grew faster than exports. Goods trade was also in deficit in addition to services. Goods trade was last in deficit in the last quarter of 2016. The net international investment position strengthened. The data appear from Statistics Finland's statistics on balance of payments and international investment position.

Current account and goods and services account

Current account

In the third quarter of 2018, the current account was EUR 0.8 billion in deficit. The balance of goods and services showed a deficit of EUR 0.7 billion. Of the sub-items of the current account, the primary income account was EUR 0.5 billion in surplus and the secondary income account EUR 0.5 billion in deficit.

Goods and services

The trade account in balance of payments terms was EUR 0.2 billion in deficit in the third quarter of 2018. In the corresponding quarter of the previous year, the trade account surplus amounted to EUR 0.5 billion. The service account showed a deficit of EUR 0.5 billion in the third quarter of 2018. The service account weakened particularly due to the strengthening imports of telecommunications, computer and information services, transport and other business services compared to the corresponding quarter last year.

Goods exports in balance of payments terms amounted to EUR 15.2 billion in the third quarter of 2018, which means that goods exports strengthened by 3 per cent from the corresponding period of 2017. Goods imports rose to EUR 15.4 billion, rising by 8 per cent year-on-year. In the third quarter of 2018, service exports grew by 5 per cent and service imports by 8 per cent compared to the corresponding quarter of the previous year. Service exports rose to EUR 6.7 billion and service imports to EUR 7.2 billion and thus the service account again showed a deficit.

More detailed import and export figures in balance of payments terms by service item and area can be found in the statistics on international trade in goods and services starting from 2015. Decreases and increases made to the Finnish Customs figures, which result in goods trade in balance of payments terms, are also broken down in the statistics on international trade in goods and services.

Primary income in the third quarter

The primary income account was EUR 0.5 billion in surplus in the third quarter of 2018. The primary income account includes compensation of employees, investment income and other primary income paid abroad from Finland and from abroad to Finland. The surplus of primary income was mainly due to investment income, which includes i.a. returns on capital like interests and dividends. In the third quarter of 2018, EUR 0.3 billion were paid in investment income in net to Finland .

The secondary income account was EUR 0.5 billion in deficit in the third quarter of 2018.

Current account in deficit in October 2018

The current account was EUR 0.2 billion in deficit in October. The value of goods exports in balance of payments terms grew by 3 per cent from twelve months back. Of the sub-items of the current account, the primary income account was in surplus. The trade account in balance of payments terms, the service account and the secondary income account were in deficit.

Finland’s current account and goods and services account, 12 –month moving sum

Financial account and net international investment position

Net international investment position strengthened from the previous quarter

At the end of the third quarter of 2018, Finland had EUR 658.4 billion in foreign assets on gross and EUR 662.1 billion in foreign liabilities on gross. The net international investment position, that is, the difference between the stock of assets and liabilities, was thus EUR 3.8 billion negative as there were more liabilities than assets. However, the net investment position strengthened compared with the end of the previous quarter, when the net investment position was EUR -6.7 billion. The stock of both foreign assets and liabilities increased in the third quarter, but assets grew more than liabilities.

At the end of the third quarter of 2018, foreign direct investment assets on gross stood at EUR 161.6 billion and the corresponding liabilities at EUR 122.6 billion, as a result of which the net investment position of direct investments was EUR 39.0 billion positive at the end of the third quarter.

Examined by sector, mainly other monetary financial institutions had a weakening effect on the net international investment position in the third quarter of 2018. The development was opposite in many sectors, such as social security funds.

Finland’s net international investment position quarterly

Net investment position of other monetary financial institutions weakened

The net investment position of the non-financial corporations remained stable in the third quarter of 2018 compared to the previous quarter, being EUR -90.4 billion at the end of the quarter. Both assets and liabilities of the non-financial corporations grew slightly, but the growth was moderate. The biggest foreign assets of the non-financial corporations were in direct investments. The non-financial corporations had EUR 130.2 billion in such assets and EUR 106.6 billion in liabilities. The net investment position of direct investments was EUR 23.7 billion positive for the non-financial corporations sector.

A weakening took place in the net investment position of other monetary financial institutions between the second and third quarters of 2018, with a decrease from EUR -142.5 billion to EUR -149.1 billion. The negative change was due to other investments of deposit banks, such as loans from outside the group, deposits and trade credits, had most significance. In contrast, the net investment position of other credit institutions strengthened. The strengthening was caused by the positive growth of stocks of portfolio investments. Portfolio investments include bonds, money market instruments and equity. The net investment position of investment funds remained stable. Investment funds include money market funds and collective investment schemes. At the end of the third quarter the net investment position for these sectors was 58.4 billion. Investment funds have both the biggest assets and liabilities relative to the rest of the world in portfolio investments.

In general sector, social security funds have the biggest net foreign assets, EUR 146.3 billion. Most of them consisted of portfolio investments. In contrast, the net financial position of central government was negative and was EUR -78.1 billion at the end of the third quarter. Central government´s largest liabilities mainly comprise bonds that are classified in portfolio investments.

Financial account in October 2018

In October, net capital inflow to Finland amounted to EUR 4.7 billion. Of the sub-items of the financial account, net capital inflow was mostly in the form of portfolio investments. Net capital outflow from Finland was mostly in the form of other investments.

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

Inquiries: Hanna Björklund 029 551 3296, Risto Sippola 029 551 3383, balanceofpayments@stat.fi.

Director in charge: Ville Vertanen

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Appendix tables

Appendix table 1. Current account, quarterly 2018, EUR million (14.12.2018)
Appendix table 2. External assets and liabilities by sector, quarterly 2018, EUR million (14.12.2018)
Appendix table 3. International investment position by sector, quarterly 2018, EUR million (14.12.2018)
Appendix table 4. Balance of payments, EUR million (14.12.2018)

Updated 14.09.2018

Referencing instructions:

Official Statistics of Finland (OSF): Balance of payments and international investment position [e-publication].
ISSN=2342-348X. October 2018. Helsinki: Statistics Finland [referred: 19.11.2024].
Access method: http://www.stat.fi/til/mata/2018/10/mata_2018_10_2018-12-14_tie_001_en.html