Balance of Payments. Third quarter 2008

Transcription

1 Balance of Paymens Third quarer 2008

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3 Balance of Paymens Third quarer 2008 Saisics Sweden 2008

4 Balance of Paymens. Third quarer 2008 Saisics Sweden 2008 Producer Saisics Sweden, Balance of Paymens and Financial Markes SE Örebro Inquiries Lena Finn, lena.finn@scb.se Camilla Bergeling, camilla.bergeling@scb.se Malin Sundeby, malin.sundeby@scb.se I is permied o copy and reproduce he conens in his publicaion. When quoing, please sae he source as follows: Source: Saisics Sweden, Balance of Paymens. Third quarer 2008 Cover: Aeljén, SCB URN:NBN:SE:SCB-2008-FM04BR0804ENG_pdf (pdf) This publicaion will only be published on

5 Balance of Paymens. Third quarer 2008 Foreword Foreword The balance of paymens has been produced and summarised by Saisics Sweden on commission for he Swedish Riksbank since Sepember The balance of paymens is a compilaion of Sweden s real and financial ransacions wih he surrounding world and is divided in o curren accoun, capial accoun and he financial accoun. This repor comprises he resul for he hird quarer of Saisics Sweden November 2008, Lars Melin Chrisina Ekblom

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7 Balance of Paymens. Third quarer 2008 Conens Conens Foreword...3 Balance of paymens...7 Curren accoun...8 Trade in goods...8 Trade in services...9 Income...10 Direc invesmen income, ne...10 Porfolio invesmen income, ne...11 Oher invesmen income, ne...11 Curren ransfers and capial accoun, ne...12 Financial accoun...13 Direc invesmen...13 Porfolio invesmen...14 Financial derivaives...15 Oher invesmen and reserve asses...15 Inernaional invesmen posiion, ne...17 Wha is he balance of paymens?...18 Derivaion of he balance of paymens...18 The connecion o he inernaional invesmen posiion...20 Saisics Sweden 5

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9 Balance of Paymens. Third quarer 2008 Balance of paymens Balance of paymens The balance of paymens for he hird quarer of 2008 resuled in a surplus in he curren accoun of SEK 63.4 billion, a sligh negaive capial accoun and a surplus of SEK 16.6 billion in he financial accoun. Boh he rade in goods and rade in services worsened compared o he previous quarer, when expors of goods and services decreased by 10 percen and 2 percen, respecively. Trade in goods amouned o SEK 24.6 billion and rade in services amouned o 23.7 billion. Impor of goods also decreased while he impor of services increased by a couple of billion, compared in he same period. Direc invesmen ogeher wih oher capial generaed a high ne inflow during he quarer, while porfolio invesmens generaed ne ouflows, which gave rise o SEK 16.6 billion in he financial accoun. The cenral governmen's sale of Vin & Spri AB accouned for much of he ne inflow of direc invesmen. Porfolio invesmens abroad resuled in a capial ouflow of SEK 69.0 billion during he hird quarer of The larges flows were again o be found in rade in foreign shares and ineres bearing money marke insrumens. The large inflow of oher capial can be explained by he Swedish Riksbank having prepared he reserve asses o mainain liquidiy and sabiliy in he Swedish financial marke. The reserve asses' change in ransacions amouned o billion during he hird quarer, which can be compared o +0.9 billion in he las quarer. An increase in he reserve asses is lised wih a minus sign in he balance of paymens when such signifies ha holdings in foreign currency has increased. Saisics Sweden 7

10 Balance of paymens Balance of Paymens. Third quarer 2008 Curren accoun Curren accoun, ne (see Table A) In he hird quarer he curren accoun resuled in a surplus of SEK 63.4 billion and was, hus, srenghened by 21.3 billion compared o he second quarer. The large increase can be parially explained by he weak curren accoun ha was apparen in he second quarer of 2008 and in par by he coninued srong rade in services during he hird quarer. Trade in goods resuled in a surplus of approximaely SEK 25 billion which is decrease by SEK 7 billion from he second quarer. Transfers decreased compared o he previous quarer and increases slighly compare o he corresponding period year 2007 by SEK 0.5 billion each. The iem Compensaion of employees is almos unchanged and was a he same level as he previous quarer wih a ne ouflow of nearly SEK 0.5 billion. Trade in goods Trade in goods (see Table B) Trade in goods resuled in a surplus of SEK 24.6 billion in he hird quarer. The Swedish expor of goods decreased compared o his year's firs wo quarers. Expors decreased compared o he previous quarer by 10 percen, bu increased by 7 percen compared o he hird quarer of las year. Impors also decreased by approximaely 9 percen compared o he previous quarer. 8 Saisics Sweden

11 Balance of Paymens. Third quarer 2008 Balance of paymens Trade in services Trade in services (see Table D) The hird quarer's rade in services amouned o SEK 23.7 billion, which is a decrease by SEK 4.2 billion compared o he previous quarer. Expors decreased by SEK 2 billion from he previous quarer and amouned o SEK billion and impors amouned o SEK 86.7 billion afer an increase of over SEK 2 billion. The sub-iems conribuing he majoriy of he posiive ne resul are Transpor, Compuers and informaion services and Oher business services. Boh he expor and impor of ranspor increased during he quarer compared o he previous quarer. Transpor in oal generaed a surplus of SEK 7.8 billion, which is somewha lower han he previous quarer. This is a sharp increase pf SEK 2 billion compared o he corresponding quarer of The iem Travel produced a ne ouflow of SEK 2.5 billion for he hird quarer. If here are powerful seasonal variaions in his iem, he bes comparisons are o be made wih he corresponding period of las year, when he iem generaed a ne ouflow of SEK 2.6 billion. The iem oher service forms generaed an expor decrease of approximaely 11 percen from he previous quarer. The impor of oher service forms also decreased during he hird quarer. Sub-iems Technical services and Licenses and Royalies made up he larges expor decreases. Licenses and Royalies ogeher wih Compuer services also accoun for decreases among impors. Saisics Sweden 9

12 Balance of paymens Balance of Paymens. Third quarer 2008 Income Income (see able E) Income, consising of salaries and reurns on capial, showed a surplus of SEK 24.2 billion during he hird quarer, which is a disincive change from he previous quarer when he income resuled in a defici of SEK 8.1 billion. The iem has increased by SEK 3.6 billion compared o he corresponding period of las year. Income from direc invesmen resuled in a large ne inflow and nearly accouned for he enire surplus of his quarer. Income from porfolio invesmens resuled in a ne inflow of SEK 3.5 billion. Reurns on capial from oher invesmen resuled in a ne ouflow of SEK 0.5 billion, which can be compared o a ne ouflow of SEK 1.2 billion in he previous quarer. The iem Compensaion of employees generaed a ne ouflow of SEK 0.4 billion, which is a sligh change in comparison o he previous quarer and corresponding period of las year. Direc invesmen income, ne Direc invesmen income, ne (see Table E) Income on direc invesmen showed a ne inflow of SEK 21.7 billion during he hird quarer of Income from direc invesmen abroad amouned o SEK 64.3 billion, while income on corresponding foreign direc invesmen in Sweden oalled SEK 42.6 billion. The ne inflow has decreased by SEK 3.6 billion compared o he hird quarer of This can 10 Saisics Sweden

13 Balance of Paymens. Third quarer 2008 Balance of paymens be explained by he ne ouflow for he sub-iem loan under direc invesmen condiions having more han doubled compared o he hird quarer of I can also be explained by he ne inflow for repariaed dividends having decreased by SEK 1.6 billion compared o he corresponding quarer of Porfolio invesmen income, ne Porfolio invesmen income, ne(see Table E) Income on porfolio invesmen resuled in a ne inflow of SEK 3.5 billion during he hird quarer of 2008, which is an increase of SEK 5.9 billion compared o he same period las year. The main reason is due o a drop in he ne ouflow of share dividends by SEK 5.0 billion. During he firs hree quarers of 2008, income from porfolio invesmens abroad generaed an ouflow of SEK 21.8 billion, which is comparable o he ouflow of SEK 32.6 billion for he same period in The ne ouflow of he ineres iem fell from SEK 26.6 o 22.8 billion. Ne share dividends, however, increased o a ne inflow of SEK 1.1 billion, which also can be compared o an ouflow of SEK 6.0 billion for he corresponding period of Dividends from Briish and American shares made up he majoriy of he increase. Oher invesmen income, ne Oher invesmen income, ne (see Table E) 0,0-0,5-1,0-1,5-2,0-2,5-3,0-3,5 Income from oher invesmens gave rise o a ne ouflow of SEK 0.5 billion during he hird quarer 2008, which can be compared o he ne ouflow of Saisics Sweden 11

14 Balance of paymens Balance of Paymens. Third quarer 2008 SEK 1.8 billion during he same period in Thus far in he year, income from oher invesmen has given rise o a ne ouflow of SEK 3.2 billion. Income from oher invesmen consiss of earnings on loans and bank deposis ec. The larges conribuions o his iem come from Swedish banks' income on heir asses and liabiliies owards counerpars abroad. Curren ransfers and capial accoun, ne Curren ransfer and capial accoun, ne Curren ransfers and capial accoun produced a defici of SEK 10.1 billion during he hird quarer, which is an almos unchanged ouflow compared o he previous quarer. EU ransfers showed a defici of SEK 3.4 billion, which can be compared o he SEK 3.6 billion in ouflows for he same period of Transacions associaed wih EU membership make up SEK 4.7 billion in ouflow, which is SEK 1.0 billion lower han he previous quarer. Even foreign aid amouned o a ne ouflow of SEK 3.0 billion. The iem oher, ha is o say all oher ransfers ha are no associaed wih he EU or foreign aid, resuled in a ne ouflow of SEK 3.7 billion, which is a increase in ouflow by SEK 1.2 billion from he quarer before. 12 Saisics Sweden

15 Balance of Paymens. Third quarer 2008 Balance of paymens Financial accoun Financial accoun (see Table G) Swedish invesmen abroad FT1 I UTLANDET Invesmen in Sweden FS1 I SVERIGE The financial accoun resuled in a surplus of SEK 16.6 billion for he hird quarer of The large inflow from direc invesmen conribued o his quarer's surplus, which is disinc difference from he previous quarer, when porfolio invesmens made up he majoriy of he surplus. Oher invesmen conribued o he ne inflow by SEK 65.2 billion. During he quarer, porfolio invesmens showed a ne ouflow of SEK 69.0 billion. These hree iems have changed drasically compared o he quarer before, which is normal for he financial accoun, where broad variaions in flow are naural. During he quarer he Swedish Riksbank having prepared he reserve asses o mainain liquidiy and sabiliy in he Swedish financial marke. Direc invesmen Direc invesmen (see Table G) Swedish invesmen abroad FT1 I UTLANDET Invesmen in Sweden FS1 I SVERIGE The hird quarer of 2008 showed large flows in direc invesmen, which resuled in a ne inflow of SEK 72.8 billion, compared o a ne inflow of SEK 49.9 billion for he corresponding quarer of Among oher hings, he large ne inflow can be explained by he French company Pernod Ricard's purchase of shares in Vin & Spri AB and he German company Volkswagen AG's purchase of Scania shares. Aside from which he subiem shows a large ne inflow for he quarer hrough loans for direc invesmen in Sweden. Swedish direc invesmen abroad amouned o a ne ouflow of SEK 58.7 billion during he hird quarer of The equiy sub-iem shows a ne Saisics Sweden 13

16 Balance of paymens Balance of Paymens. Third quarer 2008 ouflow of SEK 39.5 billion o be compared o a ne ouflow of SEK 94.6 billion for he corresponding quarer in The loan sub-iem shows a ne inflow of SEK 26.2 billion, compared o a ne inflow of SEK 45.5 billion for he corresponding quarer of The loan secion is affeced by mulinaional groups' handling of he shor-erm inernal liquidiy and aleraions in he flows beween quarers are hus he norm. Foreign direc invesmen in Sweden produced a ne inflow of SEK billion during he hird quarer of The equiy sub-iem showed a ne inflow of SEK 41.9 billion, of which sales of Vin&Spri and Scania shares accouned for he larges flows. The loan sub-iem showed a ne inflow of SEK 70.8 billion, compared o a ne inflow of SEK 25.2 billion for he corresponding quarer in Porfolio invesmen Porfolio invesmen (see Table G) Swedish invesmen abroad FT2A PORTF. EJ DERIV. TILLG Invesmen in Sweden FS2A PORTF. EJ DERIV. SKULD Cross-border porfolio invesmen generaed capial ouflows of SEK 69.0 billion during he hird quarer of 2008, which can be compared o SEK 19.9 billion for he same period he year before. The larges flows were again o be found in rade in foreign shares and ineres bearing money marke insrumens. Swedish invesors ne purchased foreign money marke insrumens denominaed in SEK as well as oher currencies during he hird quarer of 2008, while hey decreased heir holdings of foreign reasury bonds. The Naional Deb Office accouned for a large par of hese ouflows as he liquidiy from he sale of Vin & Spri shares was invesed in foreign denominaed money marke insrumens. Cross-border equiy rading resuled in a ne ouflow of SEK 13.1 billion during he quarer, which was higher han he ne ouflow of SEK 11.4 billion for he same period las year. Swedish invesors ne purchased mainly shares from Finland, Norway and Ireland while hey ne sold German and English shares. In oal, porfolio invesmen resuled in a ne ouflow of SEK 69.8 billion during he firs hree quarers of The figure for he same period of las year was a ne inflow of SEK 53.6 billion. 14 Saisics Sweden

17 Balance of Paymens. Third quarer 2008 Balance of paymens Financial derivaives Financial derivaives (see Table J) Swedish invesmen abroad Invesmen in Sweden Financial derivaives coninued o generae a large capial inflow during he hird quarer of 2008, which resuled in a ne ouflow of SEK 5.4 billion. This is hus he firs quarer since he sar of 2007 wih a ne inflow. The corresponding quarer of 2007 insead produced capial ouflow of SEK 6.1 billion. The flows concerning financial derivaives consis primarily of realised posiive and negaive values of derivaive conracs during he period (inflow and ouflow respecively). Opion premiums ha have been paid for and received are also included in he flows. Oher invesmen and reserve asses Oher invesmen (see Table G) Swedish invesmen abroad Invesmen in Sweden Oher invesmen gave rise o a ne inflow of 65.2 billion during he hird quarer of Swedish invesmen abroad gave rise o a ne ouflow of SEK 90.7 billion while corresponding foreign invesmen in Sweden resuled in a ne inflow of SEK billion. Oher invesmen covers ransacions regarding deposis and borrowing, lending, repurchase ransacions oward and from abroad. Borrowing from foreign counries increased sharply during he hird quarer of 2008 compared o he previous quarer. Sweden's Riksbank conribued he larges increase. Saisics Sweden 15

18 Balance of paymens Balance of Paymens. Third quarer 2008 This is due o he Riksbank having large amoun of repurchase agreemens (repo) during Sepember, which was done o increase he liquidiy of reserve asses. A repo ransacion is an agreemen whereby one pary is obligaed o sell a securiy o anoher pary in exchange for liquid funds. Repo ransacions consis of wo pars, one is he securiy sold and anoher is he agreemen o repurchase he securiy a a fuure poin in ime. These large flows are also refleced in he reserve asses, which are he Riksbank's holdings in gold and foreign securiies and currency. Reserve asses are asked wih defending he value of he Swedish kronor. Reserve asses should be able o be used o provide emporary liquidiy suppor for Swedish financial players in order o mainain financial sabiliy. 16 Saisics Sweden

19 Balance of Paymens. Third quarer 2008 Balance of paymens Inernaional invesmen posiion, ne Ulandssällningen, neo (se abell I) Mdr Kr The inernaional invesmen posiion is compiled wice a year. Swedish ne liabiliy o foreign counries increased by SEK 112 billion o SEK 321 billion during he firs half of 2008, according o preliminary figures. Ne asses in he form of direc invesmen have been forecased o SEK 353 billion, which is a marginal increase compared o las year. Ne deb in he form of porfolio invesmens (porfolio shares and deb securiies) amouned o SEK 568 billion, which is a decrease of SEK 14 billion compared o The remaining ne deb, excluding direc invesmen and porfolio invesmens increased somewha during porfolio firs half of The reserve asses have decreased by SEK 15 billion during 2008 and sand a SEK 186 billion afer he firs half of The official compilaion of Sweden's inernaional invesmen posiion was revised o reflec marke value, wih he excepion of direc invesmen, which is repored a book value. A compilaion of Sweden's inernaional invesmen posiion is also published as a complemen, where marke value for direc invesmen has been calculaed, his is only done annually. According o his compilaion, Sweden's ne asses abroad for 2007 equalled SEK 426 billion. Those facors of greaes significance for he developmen of he inernaional invesmen posiion include: SEK exchange rae, share prices on he sock marke in Sweden and abroad, and he marke value of direc invesmen companies. I is imporan o noe ha several sub-iems in he inernaional invesmen posiion for 2007, such as direc invesmen and porfolio shares, are forecass. The figures should herefore be inerpreed wih cauion. Saisics Sweden 17

20 Balance of paymens Balance of Paymens. Third quarer 2008 Wha is he balance of paymens? The balance of paymens has been produced and summarised by Saisics Sweden on commission for he Swedish Riksbank since Sepember In a closed economy he level of invesmen is deermined by he oal savings in he economy. This means ha if he savings decline for some reason, invesmens will also decline. In an open economy he relaionship beween savings and invesmen is no as clear, as global financial markes enable inernaional capial o flow easily beween counries. The balance of paymens conains informaion on hese flows. Pu in simple erms, i is a compilaion of a counry's real and financial ransacions wih he res of he world. The balance of paymens can be divided ino he following. Curren accouns, including regular ransacions in goods and services, reurn on financial asses and debs, and regular ransfers such as EU subsidies and fees. The capial accoun, which covers EU subsidies and foreign aid for real invesmen as well as he purchase and sale of righs, such as paens. The financial accoun, which can be divided ino direc invesmen, porfolio invesmen, financial derivaives, oher invesmen and he reserve asses. The financial accoun shows changes in exernal financial asses and liabiliies. Derivaion of he balance of paymens A counry's gross domesic produc, GDP, is he oal value of he goods and services produced in he counry during a cerain year. Producion is used o saisfy eiher domesic demand in he form of households' consumpion, C, privae invesmen, I, and public expendiure, G, or o be delivered abroad in he form of expors of goods and services, X. Domesic demand can also be saisfied by he impor of goods and services, M. The Naional Income Ideniy shows ha a counry's producion during an individual year is equal o he sum of domesic demand ( C + I + G ) and ne sales of goods and services o he res of he world ( X ): M GDP = C + I + G + X M. 1 (1) F By adding ogeher he ne incomes,, i.e. Swedish income earned abroad (Swedish wage-earners' remuneraion abroad and earnings on foreign capial abroad) minus foreign income earned in Sweden (foreign wageearners' remuneraion in Sweden and earnings on foreign capial in 1 This relaionship is called an ideniy because i mus by definiion be fulfilled in every individual ime period. 18 Saisics Sweden

21 Balance of Paymens. Third quarer 2008 Balance of paymens Sweden) i is possible o rewrie (1) in erms of gross naional income, 2 GNI : GNI = C + I + G + X M + F. (2) Rewriing (2) gives: GNI C G = S = I + X M + F, (3) where S refers o he oal naional savings in he economy. The naional savings consis of he consolidaed public secor savings, is ax income, and households' savings, GNI According o: T C. 3 T G, where S I = X M + F. (4) The difference beween S and I is ofen called ne exernal invesmen and he difference beween X and M is called rade in goods. X M + F is called he curren accoun. Equaion (4) hus shows ha here is a simple connecion beween ne invesmens and rade in goods. For a given ne income, changes in he difference beween S and I will always be followed by corresponding changes in he difference beween X and M. Equaion (4) also shows ha i is no possible in he shor erm o reduce a defici in he rade in goods wihou a he same ime increasing 4 naional savings or reducing domesic invesmen. I is also ineresing o noe ha equaion (4) means ha if households' savings are as grea as domesic invesmen, public secor savings will develop roughly in line wih ne expors over ime. 5 In he same way as naional savings can be divided up ino he consolidaed public secor's savings and households' savings, domesic invesmens can be divided up ino public secor invesmen and privae invesmen. This division indicaes ha if he public secor's invesmen exceeds is savings, and if his is no compleely couneraced by a savings surplus in he privae secor, i mus by definiion be mached by a defici on he curren accoun. A growing defici in he curren accoun can hus be a sign among many ha he cenral governmen's expendiure is greaer han is income. By combining he naional income ideniy (1) wih he naional budge resricion, i is possible o derive he balance of paymens. According o he budge resricion, he counry's oal expendiure in each ime period is limied by he income in he same period and he counry's possibiliies o borrow: T 2 These incomes are ofen called primary incomes. Ne incomes consis of wages, capial earnings and curren ransfers. 3 This means ha he naional savings are idenical o he sum of he public secor savings and households' savings. 4 Ne incomes are assumed o be consan in he shor erm. 5 This relaionship means in acual fac ha he public secor's budge balance will covary wih rade in goods during cerain periods of ime. Saisics Sweden 19

22 Balance of paymens Balance of Paymens. Third quarer 2008 GDP + r A = C + I + G + A + A ). (6) ( 1 where A are he ne exernal asses during period and r A is he ineres earnings on hese asses. The ne asses in urn consis of he capial accoun and he financial accoun. I is simple o obain he balance of paymens from (1) and (6). X M + F = ( A A ) 1. (7) + The lef side of he balance of paymens (7) is, as menioned earlier, he curren accoun, which consiss of he sum of rade in goods and ne incomes. The erm ( A ) A + 1 on he righ side shows how he ne exernal asses change over ime. Please noe ha if Swedes make ne purchases of foreign asses, he capial accoun and he financial accoun will show a ne defici, i.e. A < 0 A +1. Equaion (7) hus means ha he sum of he curren accoun, he capial accoun and he financial accoun is always 6 idenical o zero. The connecion o he inernaional invesmen posiion As he financial accoun measures exernal ne lending, a change in he curren accoun will - by definiion - always be mached by a similar change in he ne exernal claims. A surplus on he curren accoun is hus mached by an increase in exernal ne claims - privae or public secor. The surplus can also be refleced in an increase in he foreign currency reserve, as hese ransacions are included in he financial accoun. A defici on he curren accoun insead means ha he ne purchaser abroad mus pay eiher by selling exernal asses or by increasing exernal liabiliies. This means ha if, for insance, Sweden were o buy more asses abroad han are sold abroad (his is he same as saying ha he ne oal of he financial accoun is less han zero), Sweden mus a he same ime sell more goods and service abroad han i buys from abroad. Pu simply, he oal ouward paymens from a counry mus correspond o he oal inflow of paymens. The inernaional invesmen posiion shows a counry's oal ne deb and repors in he form of sock daa on all domesic secor asses and liabiliies abroad. The ne oal of asses and liabiliies is hus a measure of a counry's wealh relaive o oher counries. Sock daa is repored a marke value and can be divided up exacly like he financial accoun, ino direc invesmen, porfolio invesmen, financial derivaives, oher invesmen and he reserve asses. 7 The relaionship beween he inernaional invesmen posiion and he ransacions in he balance of paymens is illusraed below. Changes in he ne exernal posiion are due o ransacions ha have been implemened and regisered in he financial accoun and o changes in exchange raes 6 Because here are a number of sources for measuring he iems in he balance of paymens, here can arise measuremen errors such as periodisaion errors and hus here is included a residual in he form of an errors and omissions iem. 7 In cerain cases he book value is used insead of he marke value, because he base for calculaing marke value is insufficien. 20 Saisics Sweden

23 Balance of Paymens. Third quarer 2008 Balance of paymens and asse prices. In addiion, he socks can be affeced by, for insance, wrie-downs of claims (an example of oher correcions in he diagram). If he curren accoun shows a defici or surplus over a longer period of ime, his enails a build-up of eiher a ne liabiliy or a ne asse. Opening balance Changes in he inernaional invesmen posiion depending on Transacions Price changes Exchange rae Oher changes correcions Closing balance Saisics Sweden 21

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