Published: 18 December 2020

Current account in surplus in the third quarter, net international investment position weakened

The current account was in surplus in the third quarter of 2020. In balance of payments terms, the value of goods exports fell by nine per cent and the value of goods imports by 11 per cent from the corresponding quarter of the year before. Service exports, in turn, decreased by 32 per cent compared to the corresponding quarter in the previous year. Net exports of goods and services showed a deficit, but the surplus of the primary income account kept the current account positive. The net international investment position weakened. 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 and goods and services account

Current account

In the third quarter of 2020, the current account was EUR 0.6 billion in surplus. The balance of goods and services showed a deficit of EUR 0.5 billion. Of the sub-items of the current account, the primary income account was EUR 1.8 billion in surplus and the secondary income account EUR 0.6 billion in deficit.

Goods and services

The trade account in balance of payments terms was EUR 0.1 billion in surplus in the third quarter of 2020. In the corresponding quarter of the previous year, the trade account was EUR 0.2 billion in deficit. The service account showed a deficit of EUR 0.7 billion in the third quarter of 2020.

In the third quarter, the value of goods exports in balance of payment terms decreased by nine per cent from twelve months back and totalled EUR 14.1 billion while the value of goods imports in balance of payment terms decreased by 11 per cent to EUR 14.0 billion from twelve months back. In the third quarter of 2020, service exports declined by 32 per cent and service imports by 22 per cent compared to the corresponding quarter of the previous year. Service exports amounted to EUR 5.6 billion and service imports to EUR 6.2 billion.

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 2013. 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

The primary income account was EUR 1.8 billion in surplus in the third quarter of 2020. 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 such as returns on capital like interests, dividends and reinvested earnings.

In the third quarter of 2020, property income paid to Finland on net amounted to EUR 1.7 billion. Property income paid to Finland from abroad amounted to EUR 4.8 billion and from Finland abroad to EUR 3.1 billion. The secondary income account was EUR 0.6 billion in deficit in the third quarter of 2020. In the secondary income account, EUR 0.4 billion were paid to Finland and, correspondingly, EUR one billion from Finland abroad.

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

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

Financial account and net international investment position

Net international investment position weakened in the third quarter

In the third quarter of 2020, Finland had EUR 844.3 billion in foreign assets on gross and EUR 849.6 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 -5.4 billion as there were more liabilities than assets. Assets on gross diminished due to the fall in the stocks of derivatives and other investments. By contrast, liabilities on gross grew, which was mainly due to an increase in investment stocks in portfolio investments.

The net international investment position fell from the previous quarter when the net international investment position was EUR 1.7 billion. Financial transactions stood for EUR 2.2 billion of the fall in the net international investment position, while prices and exchange rates and other changes in classifications stood for EUR 4.9 billion.

Portfolio investment assets and liabilities increased

Examined by type of investment, most foreign assets at the end of the third quarter of 2020 were in the form of portfolio investments. Portfolio investment assets grew significantly from the previous quarter. At the end of the third quarter of 2020, there were EUR 338.1 billion in portfolio investment assets, while in the previous quarter there were EUR 332.4 billion in assets. Portfolio investment assets in bonds and money market instruments amounted to EUR 128.1 billion and assets in equity and mutual fund shares to EUR 210 billion.

The share of portfolio investments is also highest in foreign liabilities. At the end of the third quarter of 2020, portfolio investment liabilities stood at EUR 419.1 billion and the stock of portfolio investment liabilities also grew considerably due to price changes from the previous quarter, when the stock of portfolio investment liabilities stood at EUR 414.9 billion. Portfolio investment liabilities were highest in the form of bonds and money market instruments, which stood at EUR 269,1 billion at the end of the third quarter.

Finland’s net international investment position quarterly

Finland’s net international investment position quarterly

When examining the net international investment position by type of investment, it can be seen that the biggest net assets were in direct investments, while the largest net liabilities were in the form of portfolio investments. In the third quarter of 2020, net assets decreased most in other investments, by a total of EUR 10.4 billion, which is mainly explained by the share of deposits. Net assets of other investments amounted to EUR 9.4 billion in total at the end of the quarter.

The net assets of direct investments amounted to EUR 56.6 billion. The net liability of portfolio investments amounted to EUR 81 billion. Net liabilities of portfolio investments are explained by net liabilities of EUR 141 billion in bonds and money market instruments. Assets in equity and mutual fund shares in portfolio investments were EUR 60 billion higher than liabilities.

Net capital inflow to Finland from abroad

In the third quarter of 2020, net capital inflow to Finland from abroad amounted to EUR 2.2 billion. Net capital inflow to Finland was mainly in the form of other investments, totalling EUR 9.6 billion. In addition, in the form of the portfolio investments, net capital outflow from Finland abroad amounted EUR 5.8 billion.

Social security funds had largest net assets

When the net investment position is examined by investor sector, most foreign net assets, EUR 148.9 billion, were held by social security funds, of which employment pension schemes are the most important ones. EUR 120.8 billion of social security funds’ net assets were in the form of equity, mutual fund shares and other equity and EUR 24.9 billion in the form of money market instruments and bonds. Net assets of social security funds grew from the previous quarter primarily as a result of price changes in assets of equity and mutual fund shares. Net liabilities were held most by other monetary financial institutions, EUR 134.9 billion.


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

Inquiries: Reetta Karinluoma 029 551 3077, Timo Ristimäki 029 551 2324, balanceofpayments@stat.fi.

Head of Department in charge: Mari Ylä-Jarkko

Publication in pdf-format (335.3 kB)

Tables

Tables in databases

Appendix tables


Updated 18.12.2020

Referencing instructions:

Official Statistics of Finland (OSF): Balance of payments and international investment position [e-publication].
ISSN=2342-348X. 3rd quarter 2020. Helsinki: Statistics Finland [referred: 15.5.2021].
Access method: http://www.stat.fi/til/mata/2020/43/mata_2020_43_2020-12-18_tie_001_en.html