Current account showed a deficit in the first quarter, the net international investment position weakened

The current account was in deficit in the first quarter of 2020. In balance of payments terms, the value of goods exports fell by 12 per cent from the corresponding quarter of the year before. The fall in goods imports was more moderate. Service exports fell by 5 per cent from the respective quarter of the year before. The primary income account remained in surplus. 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

In the first quarter of 2020, the current account was EUR 1.6 billion in deficit. The balance of goods and services showed a deficit of EUR 1.2 billion. Of the sub-items of the current account, the primary income account was EUR 0.2 billion in surplus and the secondary income account EUR 0.7 billion in deficit.

Goods and services

The trade account in balance of payments terms was EUR 0.1 billion in deficit in the first quarter of 2020. In the corresponding quarter of the previous year, the trade account was EUR 1.2 billion in surplus. The service account showed a deficit of EUR 1.0 billion in the first quarter of 2020.

Goods exports in balance of payments terms amounted to EUR 14.3 billion in the first quarter of 2020, which means that goods exports declined by 12 per cent from the corresponding quarter of 2019. Goods imports amounted to EUR 14.4 billion, so goods imports declined by 5 per cent from the fourth quarter in 2019. In the first quarter of 2020, service exports declined by 5 per cent and service imports by 2 per cent compared to the corresponding quarter of the previous year. Service exports amounted to EUR 6.8 billion and service imports to EUR 7.8 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 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 first quarter

Property income paid to Finland on net amounted to EUR 0.1 billion in the first quarter of 2020, while property income paid abroad from Finland amounted to EUR 4.1 billion and property income paid to Finland from abroad to EUR 4.2 billion. The largest net amount of property income paid abroad from Finland was in the form of interests and dividends on portfolio investments, EUR 0.9 billion. In contrast, property income paid to Finland from abroad was highest in the form of direct investments, EUR 0.9 billion in the first quarter. Property income from direct investments is preliminary and will be revised with the annual data on direct investments.

The secondary income account was EUR 0.7 billion in deficit in the first quarter of 2020.

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

Financial account and net international investment position

Portfolio investments and other investments weakened the net international investment position

In the first quarter of 2020, Finland had EUR 836.7 billion in foreign assets on gross and EUR 836.8 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 -0.1 billion as there were more liabilities than assets. Both the stocks of assets and liabilities grew due to an increase in investment stocks in direct investments, other investments and derivatives. In contrast, the stocks of portfolio investments decreased on both the asset and liability side.

The net international investment position fell from the previous quarter when the net international investment position was EUR 3.5 billion. Financial transactions stood for EUR 2.9 billion of the fall in the net international investment position, while prices and exchange rates and other changes in classifications for EUR 0.7 billion.

Portfolio investment assets and liabilities decreased

Examined by type of investment, the most foreign assets were in the form of portfolio investments at the end of the first quarter of 2020. Portfolio investment assets decreased significantly from the previous quarter. At the end of the first quarter of 2020, there were EUR 313.7 billion in portfolio investment assets, while in the previous quarter there were EUR 344.1 billion in assets. The change in stocks is almost entirely explained by changes in the prices of portfolio investments. Portfolio investment assets in bonds and money market instruments amounted to EUR 128.8 billion and assets in equity and mutual fund shares to EUR 184.9 billion.

The share of portfolio investments is also highest in foreign liabilities. Portfolio investment liabilities amounted to EUR 385.6 billion at the end of the first quarter of 2020. Due to price changes, the stock of portfolio investment liabilities fell significantly from the previous quarter, when the stock of portfolio investment liabilities stood at EUR 415.4 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 first quarter.

Finland’s net international investment position quarterly

Net capital inflow to Finland from abroad

In the first quarter of 2020, net capital inflow to Finland from abroad amounted to EUR 2.9 billion. Net capital inflow to Finland was mainly in the form of other investments, EUR 5.0 billion. In portfolio investments, net capital outflow from Finland to abroad amounted to EUR 2.3 billion.

When examining the net international investment position by type of investment, it can be seen that the biggest net assets were in direct investments and other investments, while the largest net liabilities were in the form of portfolio investments. At the end of the first quarter of 2020, net assets decreased most in other investments, where net assets amounted to EUR 11.1 billion. The net assets of direct investments amounted to EUR 50.2 billion. The net liability of portfolio investments amounted to EUR 71.9 billion. Net liabilities of portfolio investments are explained by net liabilities of EUR 140.3 billion in bonds and money market instruments. Assets in equity and mutual fund shares were EUR 68.5 billion larger than liabilities.

Social security funds had largest net assets

When the net investment position is examined by investor sector, most foreign net assets, EUR 139.7 billion, were held by social security funds, of which employment pension schemes are the most important ones. EUR 109.6 billion of social security funds’ net assets were in the form of equity and mutual fund shares and EUR 26.9 billion in the form of money market instruments and bonds. Net assets of social security funds weakened 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 122.8 billion. The net investment position of monetary financial institutions improved from the last quarter of 2019. The increase in the net international investment position of other monetary financial institutions was due to decrease in net liabilities of bonds and money market instruments.

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

Inquiries: Hanna Björklund 029 551 3296, Mira Malhotra 029 551 3262, balanceofpayments@stat.fi.

Director in charge: Jan Nokkala

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Appendix tables

Appendix table 1. Current account, quarterly 2020, EUR million (22.6.2020)
Appendix table 2. External assets and liabilities by sector, quarterly 2020, EUR million (22.6.2020)
Appendix table 3. International investment position by sector, quarterly 2020, EUR million (22.6.2020)
Appendix table 4. Balance of payments, EUR million (22.6.2020)

Updated 22.6.2020

Referencing instructions:

Official Statistics of Finland (OSF): Balance of payments and international investment position [e-publication].
ISSN=2342-348X. 1st quarter 2020. Helsinki: Statistics Finland [referred: 22.11.2024].
Access method: http://www.stat.fi/til/mata/2020/41/mata_2020_41_2020-06-22_tie_001_en.html