Balance of Paymens Second quarer 2012
Balance of Paymens Second quarer 2012 Saisics Sweden 2012
Balance of Paymens. Second quarer 2012 Saisics Sweden 2012 Producer Saisics Sweden, Balance of Paymens and Financial Markes Box 24300 SE-115 81 Sockholm +46 8 506 940 00 Inquiries Fredrik Öhrsröm, +46 8 506 941 12 fredrik.ohrsrom@scb.se Jon Smedsaas, +46 8 506 947 08 jon.smedsaas@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. Second quarer 2012 Cover: Aeljén, SCB URN:NBN:SE:SCB-2012-FM04BR1203ENG_pdf This publicaion will only be published on www.scb.se.
Balance of paymens second quarer 2012 Foreword Foreword The balance of paymens has been compiled and published by Saisics Sweden on behalf of he Swedish Riksbank since 2007. The balance of paymens is a summary of Sweden s real and financial ransacions wih he res of he world, and is divided ino he curren accoun, he capial accoun and he financial accoun. This repor covers he oucome of he second quarer of 2012. Saisics Sweden, Augus 2012 Folke Carlsson Chrisina Ekblom
Balance of paymens second quarer 2012 Conens Conens Foreword... 3 Summary... 7 Balance of paymens - second quarer 2012... 8 Curren accoun... 8 Foreign rade in goods and services... 8 Income... 11 Financial accoun... 14 Direc invesmen... 14 Porfolio invesmen... 15 Financial derivaives... 16 Oher invesmen... 16 Reserve asses... 17 Revisions... 18 Inernaional invesmen posiion, ne... 19 Wha is he balance of paymens?... 20 Derivaion of he balance of paymens... 20 The connecion o he inernaional invesmen posiion... 22 Saisics Sweden 5
6 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Summary The curren accoun gave a surplus of SEK 55 billion in he second quarer. This is on a level wih he same period las year when he surplus amouned o SEK 56 billion. Foreign rade in services has coninued is srong rend and generaed a surplus of SEK 37 billion. The surplus in foreign rade in goods also increased compared o he same period las year and amouned o SEK 25 billion. Among he differen ypes of services, Oher business services, Licenses and royalies and Compuer and informaion services conribue he larges surplus. The bigges change compared o he same quarer las year is ha he defici in he Travel iem has decreased from jus over SEK 4 billion o jus under SEK 1 billion. The reduced defici depends mainly on an increase in ravel consumpion by foreign ravellers in Sweden. Income on porfolio invesmen, which shows seasonal variaion due o dividends disribued by Swedish companies, gave a ne ouflow of SEK 14 billion during he second quarer. During he same quarer of 2011, he corresponding amoun was SEK 9 billion. The rise in ne ouflow is mainly due o increased dividends from Swedish shares. The financial accoun resuled in a ne ouflow of SEK 14 billion. Direc invesmen, oher invesmen and reserve asses conribued new ouflows while porfolio invesmen and financial derivaives generaed ne inflows. Saisics Sweden 7
Balance of paymens Balance of paymens second quarer 2012 Balance of paymens second quarer 2012 The balance of paymens for he second quarer showed a surplus in he curren accoun of SEK 56 billion, a slighly negaive capial accoun and a capial ouflow of SEK 15 billion in he financial accoun. Curren accoun The curren accoun gave a surplus of SEK 55 billion in he second quarer. This is on a level wih he same period las year when he surplus amouned o SEK 56 billion. The surplus in foreign rade in goods and services increased by SEK 6 billion and amouned o SEK 61 billion. Income resuled in an inflow of SEK 4 billion which is down on he same quarer las year when he inflow amouned o SEK 8 billion. In addiion, he defici in curren ransfers increased and amouned o SEK 10 billion. Foreign rade in goods and services The oal ne rade in goods and services gave a surplus of SEK 61 billion in he second quarer. Foreign rade in goods gave a surplus of SEK 25 billion while foreign rade in services generaed a surplus of SEK 37 billion. Trade in goods and services wih EU Member Saes showed a surplus afer a long period of defici. Mos of he surplus in foreign rade in goods and services is sill generaed from non-eu counries, however. Expors of goods amouned o SEK 306 billion during he quarer while impors of goods oalled SEK 282 billion. This gave a surplus in rade in goods of SEK 25 billion. In he same quarer las year, he surplus amouned o SEK 20 billion. Impors fell more han expors, which led o an increased surplus in rade in goods. The surplus in he rade in goods 8 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens comes from rade wih non-eu counries while rade wih EU Member Saes generaed a defici. Trade in services gave a surplus of SEK 37 billion in he second quarer. This is a sronger resul compared o he same quarer las year when he surplus amouned o SEK 35 billion. Expors increased by SEK 8 billion while impors wen up by jus under SEK 7 billion which led o a greaer surplus in rade in services. Trade in services shows a surplus wih boh EU Member Saes and non-eu counries. Among he differen ypes of services, Oher business services, Royalies and license fees and Compuer and informaion services conribue he larges surplus. The bigges change compared o he same quarer las year is ha he defici in he Travel iem has decreased from jus over SEK 4 billion o jus under SEK 1 billion. This reduced defici is due o increased expors. Saisics Sweden 9
Balance of paymens Balance of paymens second quarer 2012 The Travel iem includes goods and services ha ravellers purchase when ravelling in oher counries. Travel expors, which consis of foreign ravellers consumpion when ravelling in Sweden, amouned o SEK 26 billion during he quarer. Travel impors, i.e. Swedes expenses when ravelling abroad, amouned o SEK 27 billion. Oher ypes of services are on a similar level as he same quarer las year. 10 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Income Income consiss of compensaion of employees and income from invesed capial. Togeher hese generaed a surplus of SEK 4 billion. In he same quarer las year, he surplus amouned o SEK 8 billion. Income from capial is responsible for he bigges share of he facor income. Compensaion of employees made a slighly negaive conribuion. Direc invesmen income Direc invesmen income gave a ne inflow of SEK 15 billion during he quarer as a resul of earnings from Swedish direc invesmen abroad exceeding earnings from foreign direc invesmen in Sweden. The surplus was on he same level as in he corresponding quarer las year. The second quarer is a quarer when dividends are usually relaively large, as was also he case in his quarer. Dividends are, however, on a lower level han in he same quarer las year. Ineres on direc invesmen loans conribued a defici of SEK 7 billion. Ineres coninues herefore o make a negaive conribuion o invesmen income. Saisics Sweden 11
Balance of paymens Balance of paymens second quarer 2012 Porfolio invesmen income Porfolio invesmen income generaed a ne capial inflow of SEK 14 billion, which is an increase compared o he same period las year. This increased ouflow depends mainly on he fac ha share earnings generaed lower ne inflows. Dividends from Swedish shares generaed foreign invesors income of SEK 46 billion, which was slighly higher han he same period las year. Swedes earnings from invesmen in foreign shares gave a capial inflow of SEK 47 billion. 12 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Oher invesmen income Oher invesmen income, which is ineres on loans and deposis, gave a ne surplus of jus under SEK 3 billion. Oher invesmen income abroad resuled in an inflow of jus over SEK 8 billion while Oher invesmen income in Sweden gave an ouflow of jus over SEK 5 billion. Saisics Sweden 13
Balance of paymens Balance of paymens second quarer 2012 Financial accoun The financial accoun resuled in a ne ouflow of SEK 14 billion during he second quarer. Direc invesmen, oher invesmen and reserve asses generaed ne ouflows while porfolio invesmen and financial derivaives generaed ne inflows. Direc invesmen Direc invesmen gave a ne ouflow of SEK 19 billion in he second quarer. Swedish direc invesmen abroad increased during he quarer by SEK 48 billion while foreign direc invesmen in Sweden increased by SEK 28 billion. Equiy and reinvesed earnings conribued greaer ouflows o Swedish direc invesmen abroad while loans and reinvesed earnings mosly conribued o he inflow in foreign direc invesmen. Several major ransacions have been carried ou wihin groups of companies as regards boh equiy and loans during he quarer. However, several of he ransacions cancel each oher ou which explains he relaively small aggregae ne flows. 14 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Porfolio invesmen Porfolio invesmen gave a ne capial inflow of SEK 12 billion during he second quarer of 2012. Cross-border rade in deb securiies resuled in a ne inflow of SEK 60 billion. The bigges inflow is generaed by increased borrowing by Swedish banks abroad. In oal, foreign invesors bough currency-denominaed securiies for SEK 31 billion in he banks issues. Foreign invesors also increased heir holdings of governmen bonds, bu a he same ime decreased heir holdings of reasury bills. Swedish invesors sold foreign deb securiies for SEK 26 billion ne during he quarer. On he oher hand, here was considerable ineres in foreign shares and funds which generaed a ne capial ouflow of SEK 52 billion. Saisics Sweden 15
Balance of paymens Balance of paymens second quarer 2012 Financial derivaives During he second quarer a capial inflow of abou SEK 7 billion was noed for he financial derivaives iem. Lower capial flows on boh foreign and Swedish conracs were generaed during he quarer. Flows from financial derivaives arise in par when derivaive conracs wih foreign counerpars become due, and in par via differen ypes of premium paymens, mainly opions. The ype of derivaive ha resuls in he larges ransacions originaes from differen ypes of currency derivaives. Oher invesmen Oher invesmen gave a ne ouflow of SEK 10 billion in he second quarer. The ne flow was less han in previous periods which is explained by he fac ha he flows in boh lending and borrowing were relaively equal during he quarer. Lending gave a ne ouflow of SEK 75 billion while borrowing generaed a ne inflow of SEK 65 billion. The bank secor was responsible for mos of he flows. Non-financial corporaions increased heir bank holdings abroad by SEK 12 billion. Oher invesmen mainly consiss of loans by he bank secor o and from oher counries, excluding loans of securiies. Among oher hings, hese include promissory noe loans, deposis and repurchases. 16 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Reserve asses Reserve asses gave a ne ouflow of SEK 4 billion during he quarer. A he end of June, herefore, reserve asses amouned o SEK 355 billion. Saisics Sweden 17
Balance of paymens Balance of paymens second quarer 2012 Revisions Sweden s revision policy for he balance of paymens is as follows: When publishing Quarer 1, he previous 4 quarers are revised When publishing Quarer 2, he previous 13 quarers are revised When publishing Quarer 3, he previous 10 quarers are revised When publishing Quarer 4, he previous 11 quarers are revised By way of excepion, furher periods can be revised if mehodological changes have been made or new daa have arisen ha provide a subsanially changed picure of he balance of paymens. When publishing 2012 Quarer 2, he normal revision policy has been abandoned. The balance of paymens has been revised from 1998 Quarer 1 up o and including 2012 Quarer 1. During he revised period, ne revisions of SEK -27 billion occurred in he curren accoun and of SEK 17 billion in he financial accoun. 18 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens Inernaional invesmen posiion, ne A he end of June 2012, preliminary daa show ha Sweden coninues o have a ne deb o oher counries. The deb amouned o SEK 434 billion and increased somewha compared o he same esimae for he end of 2011. Three main facors influence he developmen of he oal asses and liabiliies wih oher counries. Firs of all, he size of he surplus or deb in he curren accoun makes a difference. Anoher facor is he developmen of he Swedish krona (SEK) agains oher currencies. As he sock of asses and liabiliies increases, flucuaions in he exchange rae have a greaer impac. The hird imporan facor is changes in he price of differen ypes of asses, mainly share prices bu also changes in ineres raes. The curren accoun has coninued o conribue a major surplus during 2012. The ouflow in he financial accoun also indicaes ha he ne deb o oher counries should decrease. The ne deb o oher counries has coninued o rise, however. Oher facors ha influence he inernaional invesmen posiion are he exchange rae and he effec of ineres rae and share price changes on differen ypes of asses. I is more difficul o assess how hese have influenced he inernaional invesmen posiion over he las six monhs. I is imporan o poin ou ha daa on Sweden s asses and liabiliies abroad are preliminary and will mos likely be revised when he saisics are updaed wih more definiive figures. Definiions and explanaions The inernaional invesmen posiion is a summary of all domesic secors oal asses and liabiliies abroad. The ne resul of hese asses and liabiliies is a measure of Sweden s wealh in relaion o oher counries. This should no be confused wih he naional deb, which is he oal defici and surplus in he cenral governmen budge over ime. Saisics Sweden 19
Balance of paymens Balance of paymens second quarer 2012 Wha is he balance of paymens? The balance of paymens has been produced and compiled by Saisics Sweden on behalf of he Swedish Riksbank since 2007. 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, invesmen 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. Simply pu, i is a summary of a counry s real and financial ransacions wih he res of he world and can be divided ino he following: The curren accoun, including regular ransacions in goods and services, earnings from financial asses and liabiliies, and curren 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, divided ino direc invesmen, porfolio invesmen, financial derivaives, oher invesmen and reserve asses, The financial accoun shows changes in financial asses and liabiliies in relaion o he res of he world. Derivaion of he balance of paymens A counry s gross domesic produc, BNP, 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 household consumpion, C, privae invesmen, I, and public spending, 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 ): ( BNP = C + I + G + X M. 1 (1) By adding ogeher he ne facor income, F, i.e. Swedish facor income earned abroad (compensaion o Swedish wage-earners abroad and earnings on Swedish capial abroad) minus foreign facor income earned in Sweden (compensaion o foreign wage-earners in Sweden and earnings on 1 This relaionship is called an ideniy because i mus by definiion be fulfilled in every individual ime period. 20 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens foreign capial in Sweden) can (1) be rewrien in erms of gross naional income, BNI : 2 BNI = C + I + G + X M + F.(2) Rewriing (2) gives: BNI 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, T G, where T is ax income, and household savings, BNI T C. 3 According o (3) he following applies: 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 he rade balance. X M + F is he curren accoun. Equaion (4) hus shows ha here is a simple connecion beween ne invesmen and he rade balance. 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 rade defici wihou a he same ime increasing naional savings or reducing domesic invesmen. 4 I is also ineresing o noe ha equaion (4) means ha if household 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 consolidaed public secor savings and household savings, domesic invesmen can be divided up ino public secor invesmen and privae invesmen. This division indicaes ha if public secor 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 in he curren accoun. A growing defici in he curren accoun can hus be a sign ha cenral governmen expendiure is greaer han 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: 2 This facor income is ofen referred o as primary income. Ne facor income consiss of salaries, invesmen income and curren ransfers. 3 This means ha he naional savings are idenical o he sum of public secor savings and household savings. 4 Ne facor income is assumed o be consan in he shor erm. 5 This relaionship means in acual fac ha he public secor budge balance will covary wih he rade balance during cerain periods of ime. Saisics Sweden 21
Balance of paymens Balance of paymens second quarer 2012 BNP + r A = C + I + G + A + A ). (6) ( 1 where A are he ne exernal asses during period and r A is he ineres income 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 rade balance and ne facor income. 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 < A +1 0. Equaion (7) hus means ha he sum of he curren accoun, he capial accoun and he financial accoun is always idenical o zero. 6 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 in 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 reserve asses, 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 services 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 is repored in he form of sock daa on all he domesic secor s exernal asses and liabiliies. The ne oal of asses and liabiliies is hus a measure of a counry s wealh relaive o oher counries. Sock daa are repored a marke value and can be divided up exacly like he financial accoun, ino direc invesmen, porfolio invesmen, financial derivaives, oher invesmen and 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 and asse prices. In addiion, he socks can be affeced by, for insance, 6 Because here are a number of sources for measuring he iems in he balance of paymens, measuremen errors, such as periodisaion errors, can arise. A residual in he form of an errors and omissions iem has herefore been included. 7 In cerain cases he book value is used insead of he marke value, because he base for calculaing marke value is insufficien. 22 Saisics Sweden
Balance of paymens second quarer 2012 Balance of Paymens 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 23
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