Balance of Paymens Third quarer 2009
Balance of Paymens Third quarer 2009 Saisics Sweden 2009
Balance of Paymens. Third quarer 2009 Saisics Sweden 2009 Producer Saisics Sweden, Balance of Paymens and Financial Markes Box 24300 SE-115 81 Sockholm +46 8 506 940 00 Inquiries Lena Finn, +46 8 506 944 09 lena.finn@scb.se Camilla Bergeling, +46 8 506 942 06 camilla.bergeling@scb.se Lizee Appelberg, +46 8 506 944 04 lizee.appelberg@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 2009 Cover: Aeljén, SCB URN:NBN:SE:SCB-2009-FM04BR0904ENG_pdf (pdf) This publicaion will only be published on www.scb.se.
Balance of paymens, hird quarer 2009 Foreword Foreword The balance of paymens has been produced and summarised by Saisics Sweden on commission for he Riksbank since Sepember 2007. The balance of paymens is a compilaion of Sweden's real and financial ransacions wih he res of he world, and can be divided ino he curren accoun, he capial accoun and he financial accoun. This repor includes he resuls of he hird quarer of 2009. Saisics Sweden December 2009 Lars Melin Chrisina Ekblom
Balance of paymens - Third quarer Conens Conens Foreword... 3 Balance of paymens... 7 Curren accoun... 8 Trade in goods... 8 Trade in services... 9 Income... 10 Income on direc invesmens... 11 Income on porfolio invesmens... 12 Income on oher invesmens... 12 Financial accoun... 14 Direc invesmen... 14 Porfolio invesmen... 15 Financial derivaives... 16 Oher invesmens... 16 Reserve asses... 17 Inernaional invesmen posiion, ne... 18 Wha is he balance of paymens?... 19 Derivaion of he balance of paymens... 19 The connecion o he inernaional invesmen posiion... 21 Saisics Sweden 5
6 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens Balance of paymens The balance of paymens for he hird quarer of 2009 resuled in a surplus in he curren accoun of SEK 53.1 billion, a sligh negaive capial accoun and a surplus of SEK 174.7 billion in he financial accoun. The oal ne rade in goods and services amouned o SEK 48.3 billion during he hird quarer, which is a decrease boh from he previous quarer and he corresponding quarer of 2008. I is mainly rade in goods ha coninues o decline. The value of expors and impors boh decreased by approximaely 18 percen since he corresponding quarer of 2008. The ravel iem showed a ne inflow for he firs ime afer foreign ravellers consumpion while ravelling in Sweden increased by 6 percen since he corresponding quarer of las year. The financial crisis and srong downurn in he business cycle have brough abou lowered corporae profis. This can be seen in he dividends for companies involved in direc invesmens ha produced a ne inflow of SEK 16.0 billion during he quarer. Toal reurn on capial generaed a ne inflow of SEK 16.2 billion during he quarer, which can be compared o SEK 37.3 billion in he previous quarer. The financial accoun resuled in a ne ouflow of SEK 174.7, of which direc invesmens accouned for he larges ne ouflow of SEK 98.3 billion. Vaenfall AB acquired he Duch energy company Nuon during he hird quarer, which conribued o he large ne ouflow. Oher invesmens also resuled in large ne ouflows of roughly SEK 78.9 billion. I was mainly he larger Swedish banks ha also coninued o generae capial ouflows in he hird quarer, which is due o he decreased borrowing abroad. Saisics Sweden 7
Balance of paymens Balance of paymens hird quarer 2009 Curren accoun The curren accoun surplus was weakened by approximaely SEK 20 billion during he hird quarer from he previous quarer and amouned o SEK 53.1 billion. The curren accoun also weakened in comparison o he corresponding period of las year by approximaely SEK 29 billion. Invesmen income has decreased by more han half since he hird quarer of las year, which conribued o he weakening. The rade balance amouned o SEK 21.7 billion afer coninued decline in rade in goods. Trade in services amouned o SEK 26.6 billion, which is a decrease compared o boh he previous quarer and he corresponding period of las year. Income resuled in a ne inflow of SEK 15.7 billion and he curren ransfers resuled in a ne ouflow of SEK 10.9 billion. Trade in goods Expor of goods amouned o SEK 241.3 billion during he hird quarer and impor of goods amouned o SEK 219.5 billion, which produces a ne rade balance of SEK 21.7 billion. Expors coninued sinking and have decreased in value by 18 percen in comparison o he corresponding period of las year. In conras, impors were srenghened during he 8 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens quarer compared o he previous quarer, bu also declined in value by approximaely 18 percen in he hird quarer of 2008. Trade wih EU counries, accouning for more han half of Swedish expors and impors, declined sharply compared o he corresponding period of 2008. Trade in services Boh expors and impors of services have increased in comparison o he previous quarer, which resuled in a ne rade amouned o SEK 26.6 billion. In comparison o he hird quarer of 2008, he surplus in he rade in services in conras decreased by SEK 1.8 billion, due o a lower level of expors while he impor of services was nearly unchanged. The oal expor of ranspor services amouned o SEK 19.5 billion and impors (of same) amouned o SEK 14.8 billion afer boh impors and expors had increased in he previous quarer. In comparison o he hird quarer of 2008, here was in conras a decrease for boh flows, by SEK 2.2 billion for expors and by SEK 1.3 billion for impors. The increased inflow from he previous quarer was mainly due o he increased expors of shipping services and air ranspor. The increase in impors was also conribued o by air ranspor as well as rail ranspor, which boh had posiive developmens in he previous quarer. The iem ravel includes goods and services ha ravellers obain when ravelling in oher counries. Comparisons are bes made op he corresponding period of he las year because his iem is subjec o sharp seasonal variaion. The rend in earlier quarers ha decreased he defici coninued for his quarer as well and for he firs ime he iem ravel showed a ne inflow, amouning o SEK 0.2 billion. Expor of ravel, consising of ravellers' consumpion when ravelling in Sweden, increased by 6 percen compared o he hird quarer of 2008 and amouned o SEK 26.5 billion. Impors, i.e., Swedes' expenses when ravelling abroad, amouned o SEK 26.4 billion, a decrease of 4 percen by he same comparison. Saisics Sweden 9
Balance of paymens Balance of paymens hird quarer 2009 Boh expors and impors of he oher service socks decreased in oal since he previous quarer and resuled in a surplus SEK 21.7 billion. Expors also declined in comparison during he corresponding period of 2008 while in conras impors were srenghened. The increase in impors was mainly due o he increased ouflow of he sub-iem oher business services. In he previous quarer i was mainly he sub-iems licenses and royalies and consrucion services ha conribued o he negaive ne developmen. However he oal decrease was limied o ne increases in he sub-iems communicaion services and compuer and informaion services. Income Income, consising of compensaion paid o employees and invesmen income showed a surplus of SEK 15.7 billion during he hird quarer, which was an increased ne inflow of SEK 4.7 billion from he previous quarer. Reurns on direc invesmen resuled in a ne inflow of SEK 16.0 billion while reurns on porfolio invesmens resuled in a ne ouflow of 1.7 billion. Reurns on oher invesmens resuled in a ne inflow of SEK 1.9 billion, which can be compared o he ne inflow of SEK 2.7 billion in he previous quarer. The iem compensaion of employees generaed a ne ouflow of SEK 0.5 billion, in line wih previous periods. 10 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens Income on direc invesmens Income on direc invesmens generaed a ne inflow of SEK 16.0 billion where reinvesed profis accouned for he large inflow. On he whole, income on direc invesmens were significanly lower in 2009 han in earlier periods. The financial crisis has affeced he real economy and hus corporae profis, which affec reurns for companies working in direc invesmen. Income on direc invesmens abroad amouned o SEK 48.2 billion which can be compared o an inflow of SEK 68.5 billion in he hird quarer of 2008. Income on direc invesmens in Sweden amouned o SEK 32.3 billion, which was an ouflow decrease of SEK 2.6 billion compared o he hird quarer of 2008. Dividends generaed a ne ouflow of SEK 5.7 billion during he quarer. Income on direc invesmens have been sharply revised for 2008 due o he forecased 2008 values being replaced wih values based on he resuls from he survey for corporaions working in direc invesmen. Saisics Sweden 11
Balance of paymens Balance of paymens hird quarer 2009 Income on porfolio invesmens Income on porfolio invesmens produced a ne ouflow of SEK 1.7 billion during he hird quarer, which can be compared o he ne inflow of SEK 4.2 billion during he corresponding quarer of 2008. Income on deb securiies generaed a oal ne ouflow of SEK 11.1 billion during he hird quarer. Ineres coss for Swedish deb securiies amouned o SEK 21.5 billion. Reurns on foreign deb securiies amouned o SEK 10.5 billion and dividends on foreign shares amouned o SEK 9.3 billion. Toal reurns on porfolio invesmens abroad resuled in a ne inflow of SEK 19.8 billion. Income on oher invesmens Income on oher invesmens gave rise o a ne ouflow of SEK 1.9 billion during he hird quarer 0.5, which can be compared o he ne ouflow of SEK billion during he same period in 2008. Reurns on oher invesmens abroad amouned o SEK 10.6 billion and reurns in Sweden amouned o SEK 8.7 billion. Income on oher invesmens consis of reurns 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. 12 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens Curren ransfers and capial accoun The defici in curren ransfers and he capial accoun increased since he previous quarer by SEK 7.9 billion and amouned o SEK 12.2 billion. When compared o he hird quarer of 2008, he defici has increased by SEK 1.7 billion. The ouflow for curren ransfers increased since he previous quarer, which was mainly due o he ransfers conneced o he EU increased by SEK 4.0 billion. A he same ime he oal inflow of curren ransfers decreased by SEK 4.7 billion, which brough abou an increased defici for he iem since he previous quarer. 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 4.2 billion, which is an unchanged ouflow. Saisics Sweden 13
Balance of paymens Balance of paymens hird quarer 2009 Financial accoun The financial accoun's resuls showed a ne ouflow of SEK 174.7 billion. Direc invesmens accouned for he larges ne ouflow of SEK 98.3 billion. Oher invesmens, financial derivaives and reserve asses also brough abou he capial ouflow. Porfolio invesmens, in conras, resuled in a ne inflow of SEK 55.9 billion, which is mainly explained by securiies borrowing abroad. Direc invesmen Direc invesmens produced a ne ouflow of SEK 98.3 billion for he hird quarer 2009, which can be compared o he ne inflow of SEK 6.2 billion in he previous quarer. The capial ouflow is mainly explained by Vaenfall AB's acquisiion of he Duch energy company Nuon. 14 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens Swedish direc invesmens abroad resuled in a ne ouflow of SEK 126.1 billion. The large ouflow mainly came from he equiy sub-iem ha produced a ne ouflow of SEK 114.9 billion, where Vaenfall AB s acquisiion of Nuon conribued largely o he ouflow. The loan sub-iem showed a ne inflow of SEK 23.2 billion, compared o a ne inflow of SEK 39.5 billion for he corresponding quarer in 2008. Foreign invesmen in Sweden amouned o a ne inflow of SEK 17.9 billion during he quarer. In general i was clearly noed how he global business cycle downurn could be seen in he figures for sharply decreased numbers of new invesmens boh in Sweden and abroad. Porfolio invesmen Porfolio invesmens generaed a oal capial inflow of SEK 55.9 billion during he hird quarer of he year. The inflow is mainly due o rade in Swedish deb securiies. In conras, Swedish invesmens in shares and deb securiies abroad brough abou a capial ouflow. Foreign invesors' rade in Swedish securiies brough abou a ne inflow of SEK 97.5 billion. The inflow is mainly due o deb securiies borrowing abroad. Swedish banks and housing credi insiuions coninued o finance heir aciviies by borrowing abroad in he hird quarer. The Swedish Naional Deb Office also issued securiies and conribued o he inflow. Swedish invesmens in foreign deb securiies produced a ne ouflow of SEK 48.0 billion during he hird quarer. I was mainly he purchase of foreign shares ha conribued o he capial ouflow. In he hird quarer of 2009 a new mehod regarding saisics abou rade in Swedish deb securiies denominaed in foreign currencies was inroduced. Colleced ransacions have been replaced wih esimaions base on balance values, revised for exchange rae changes and oher changes in value. Saisics Sweden 15
Balance of paymens Balance of paymens hird quarer 2009 Financial derivaives Transacions in financial derivaives generaed a ne ouflow of SEK 17.0 billion in he hird quarer of 2009. The large flows seen in he earlier quarers have now decreased and have reached significanly lower levels. Flows from financial derivaives arise hrough realised values from conracs which have become due, as well as hrough differen ypes of premium paymens. The financial insrumens ha derivaives are composed of are mainly opions, fuures and swaps. The larges volumes refer o differen ypes of currency derivaives. Oher invesmens Oher invesmens produced a ne ouflow of SEK 78.9 billion for he hird quarer of 2009. Oher invesmens generaed a ne inflow of SEK 84.9 billion he corresponding period of las year. Oher invesmens mainly consis of he banking secor's loans o and from abroad excep for securiies loans, which vary grealy from quarer o quarer. The larger Swedish banks also coninued o generae a capial ouflow during his quarer, which is due o decreased borrowing abroad. 16 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens As wih he previous quarer, Riksbank conribued o a raher large par of he ouflow. Foreign invesmens in Sweden produced a oal ne ouflow of SEK 163.5 billion. Swedish invesmens abroad brough abou a ne inflow of SEK 84.6 billion. The inflow is mainly due o reduced lending abroad. Reserve asses The reserve asses resuled in a ne ouflow of SEK 36.3 billion during he hird quarer, which was a relaively large change hisorically speaking. This was more han a reducion by half compared o he second quarer of 2009. The capial ouflow is largely due o he disribuion of Special Drawing Righs (SDR) by he IMF in Augus, bu i is also due o he purchase of foreign bonds. SDR is an inernaional reserve asse ha was brough ino being by he Inernaional Moneary Fund (IMF) for disribuion o member saes. One of he Riksbank's mos imporan asks is o see o i ha he Swedish banks mainain liquidiy. Increased underakings oward foreign organisaions, oher cenral banks and increased need for foreign currency in Swedish banks brough abou he reinforcemen of he currency reserve. During he quarer he Riksbank has coninued o loan capial denominaed in foreign currency o he Swedish Naional Deb Office. Saisics Sweden 17
Balance of paymens Balance of paymens hird quarer 2009 Inernaional invesmen posiion, ne The Swedish ne liabiliy o foreign counries increased in he firs half of 2009 by SEK 138 billion and amouned o SEK 582 billion according o preliminary figures. This is he larges Swedish liabiliy o foreign counries since 2004. Ne asses in he form of direc invesmen have been forecased o SEK 458 billion, which is a marginal increase compared o las year. The facor of greaes significance regarding he developmen of he inernaional invesmen posiion is he exchange rae of he Swedish krona. Oher imporan facors are sock marke prices in Sweden and abroad, as well as he marke value of direc invesmen companies. The value of asses and liabiliies o oher counries in erms of derivaive insrumens remains a a high level. By he end of he year balance values for asses in derivaive conracs, i.e. conracs wih posiive marke values, amouned o SEK 498 billion. The corresponding balance values, i.e., conracs wih negaive marke values, amouned o SEK 427 billion. The ne liabiliy for porfolio invesmens increased sharply during he firs half of 2009 and amouned o SEK 1 142 billion. Ne liabiliy for oher invesmens amouned o SEK 282 billion. The currency reserve increased o SEK 80 billion in 2009, afer Riksbank's decision o enhance he currency reserve, and showed a balance value of SEK 313 billion afer six monhs. 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 published as a complemen, wih calculaions of he marke value for direc invesmen. According o his compilaion, Sweden's ne asses abroad equalled SEK 260 billion in 2009. 18 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens Wha is he balance of paymens? The balance of paymens has been produced and summarised by Saisics Sweden on behalf of he Swedish Riksbanken since Sepember 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, 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. I is simply a summary of a counry's real and financial ransacions wih he world abroad. 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, divided ino direc invesmens, porfolio invesmens, financial derivaives, reurn on oher invesmens and he currency reserve. 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) By adding ogeher he ne incomes, F, 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. Saisics Sweden 19
Balance of paymens Balance of paymens hird quarer 2009 Sweden) i is possible o rewrie (1) in erms of gross naional income, GNI : 2 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, T G, where T is ax income, and households' savings, GNI T C. 3 According o: S I = X M + F. (4) The difference beween and he difference beween S and I is ofen called ne exernal invesmen 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 naional savings or reducing domesic invesmen. 4 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: 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. 20 Saisics Sweden
Balance of Paymens Third quarer 2009 Balance of Paymens 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 < 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 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. Saisics Sweden 21
Balance of paymens Balance of paymens hird quarer 2009 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 Exchange rae Oher changes changes correcions Closing balance 22 Saisics Sweden
www.scb.se www.scb.se