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

The current account was in deficit in the second quarter of 2020. In balance of payments terms, the value of goods exports fell by 12 per cent and the value of goods imports by 20 per cent from the corresponding quarter of the year before. Service exports, in turn, fell by 28 per cent from the respective quarter of the year before. The primary income account turned into deficit. 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 second quarter of 2020, the current account was EUR 0.8 billion in deficit. The balance of goods and services showed a surplus of EUR 0.3 billion. Of the sub-items of the current account, the primary income account was EUR 0.3 billion in deficit and the secondary income account EUR 0.8 billion in deficit.

Goods and services

The goods account in balance of payments terms was EUR 1.0 billion in surplus in the second quarter of 2020. In the corresponding quarter of the previous year, the goods account was EUR 0.2 billion in deficit. The service account showed a deficit of EUR 0.7 billion in the second quarter of 2020.

Goods exports in balance of payments terms amounted to EUR 13.8 billion in the second quarter of 2020, which means that goods exports fell by 12 per cent from the corresponding quarter of the previous year. Goods imports amounted to EUR 12.8 billion, so goods imports declined by 20 per cent from the quarter in the previous year. In the second quarter of 2020, service exports declined by 28 per cent and service imports by 22 per cent compared to the corresponding quarter of the previous year. Service exports amounted to EUR 5.7 billion and service imports to EUR 6.4 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 in the second quarter

In the second quarter of 2020, property income paid on net from Finland amounted to EUR 0.4 billion, while property income paid to Finland from abroad amounted to EUR 4.9 billion and property income paid abroad from Finland to EUR 5.3 billion. The largest net amount of property income paid abroad from Finland was in the form of interests and dividends on portfolio investments, EUR 1.6 billion. By contrast, most property income was paid from abroad to Finland in the second quarter in the form of direct investments, EUR 1.1 billion.

The secondary income account was EUR 0.8 billion in deficit in the second 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 weakened the net international investment position

In the second quarter of 2020, Finland had EUR 844.6 billion in foreign assets on gross and EUR 846.6 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 -2.0 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 3.8 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 3.5 billion.

Portfolio investment assets and liabilities increased

Examined by type of investment, most foreign assets at the end of the second quarter of 2020 were in the form of portfolio investments. Portfolio investment assets grew significantly from the previous quarter. At the end of the second quarter of 2020, there were EUR 328.1 billion in portfolio investment assets, while in the previous quarter there were EUR 313.7 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 129.7 billion and assets in equity and mutual fund shares to EUR 198.4 billion.

The share of portfolio investments is also highest in foreign liabilities. At the end of the second quarter of 2020, portfolio investment liabilities stood at EUR 414.5 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 386.8 billion. Portfolio investment liabilities were highest in the form of bonds and money market instruments, which stood at EUR 276.4 billion at the end of the second quarter.

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 and other investments, while the largest net liabilities were in the form of portfolio investments. At the end of the second quarter of 2020, net assets increased most in other investments, where net assets amounted to EUR 19.3 billion. The net assets of direct investments amounted to EUR 56.0 billion. The net liability of portfolio investments amounted to EUR 86.4 billion. Net liabilities of portfolio investments are explained by net liabilities of EUR 146.8 billion in bonds and money market instruments. Assets in equity and mutual fund shares were EUR 60.3 billion larger than liabilities.

Net capital inflow to Finland from abroad

In the second quarter of 2020, net capital inflow to Finland from abroad amounted to EUR 2.2 billion. Net capital inflow to Finland was mostly in the form of portfolio investments, EUR 8.6 billion, of which EUR 5.2 billion is explained by the growth in liabilities in bonds and money market instruments. In other investments, net capital outflow from Finland abroad amounted to EUR 5.2 billion. In addition, in direct investments, net capital outflow from Finland abroad amounted to EUR 1.6 billion.

Social security funds had largest net assets

When the net investment position is examined by investor sector, most foreign net assets, EUR 142.4 billion, were held by social security funds, of which employment pension schemes are the most important ones. EUR 114.0 billion of social security funds’ net assets were in the form of equity and mutual fund shares and EUR 25.0 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 133.8 billion. The net investment position of monetary financial institutions weakened from the first quarter of 2020 due to increased net liability of portfolio investments.

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

Inquiries: Hanna Björklund 029 551 3296, Johannes Nykänen 029 551 3641, balanceofpayments@stat.fi.

Head of Department in charge: Mari Ylä-Jarkko

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Appendix tables

Appendix table 1. Current account, quarterly 2020, EUR million (18.9.2020)
Appendix table 2. External assets and liabilities by sector, quarterly 2020, EUR million (18.9.2020)
Appendix table 3. International investment position by sector, quarterly 2020, EUR million (18.9.2020)
Appendix table 4. Balance of payments, EUR million (18.9.2020)

Updated 18.9.2020

Referencing instructions:

Official Statistics of Finland (OSF): Balance of payments and international investment position [e-publication].
ISSN=2342-348X. 2nd quarter 2020. Helsinki: Statistics Finland [referred: 22.11.2024].
Access method: http://www.stat.fi/til/mata/2020/42/mata_2020_42_2020-09-18_tie_001_en.html