2007-10-16
Current account balance. In August 2007, the deficit in the current account of the country’s balance of payments was LTL 608.39 million, showing a decrease of 32 percent, compared to July and of 41.4 percent year-on-year. The contraction of CAD was driven by the balance of positive current transfers, which increased more than two-fold, and a slump in foreign trade deficit.
In January - August 2007, CAD amounted to LTL 7.9 billion, 53.6 percent above the figure for corresponding period in 2006. The increase was determined by foreign trade deficit which widened by LTL 2.12 billion accounting for three thirds of the total increase in CAD.
According to the preliminary data of the Department of Statistics, in August 2007, the month-on-month export of goods grew by 1.7 percent, while import of goods grew by 1.7 percent.
In January - August 2007, the year-on-year rise in export and import of goods was 10.6 and 16 percent, respectively, while foreign trade deficit widened by 32.3 percent to make up LTL 11.2 billion. Export growth was driven by an increase in export of plastics and plastic articles (90.2 %), fertilisers (38.4 %), ground vehicles (33.3 %), machinery and mechanical appliances (24.2%). Meanwhile, import growth was driven by an increase in the import of ground vehicles except for tram rolling-stock (47.8 %), organic chemical products (2.8 times), iron and steel (51.1 %).
In January - August 2007, Export to the EU25 Member States grew by 15 percent, while import from these countries increased by 29.1 percent. Export to the CIS countries went up by 30.8 percent, while import from them decreased by 14.1 percent.
In January - August 2007, the main Lithuania’s export partners were Russia (14.0 %), Latvia (13.0 %), Germany (10.7 %), and Poland (6.5 %), while the main import partners were Russia (19.1 %), Germany (14.8 %) and Poland (10.3 %).
Month on month, August 2007 export of services contracted by 6 percent, while import of services went down by 9.6 percent. The total positive surplus in the balance of services went up by 7 percent (was LTL 256.4 million). In January - August, the year-on-year increase in the export of services was 7.1 percent, while import of services jumped by 22.1 percent. The positive surplus on the balance of services in January - August 2007 declined by LTL 519.2 million or 25.8 percent.
In August 2007, payments to non-residents on their investment in Lithuania made up LTL 461.4 million, while the income of domestic economic entities on their investment abroad made up LTL 115.2 million. In August, the investment income balance deficit equalled to LTL 346.2 million, down by 1.1 percent only compared to July. Since the positive labour income balance also declined in August, the total deficit of the income balance for the month grew by 1.3 percent to LTL 261.7 million.
In January - August 2007, the year-on-year increase in the income balance deficit was 27 percent up to LTL 2.48 billion.
In August 2007, the surplus in the balance of current transfers amounted to LTL 350.3 million versus LTL 173.6 million in July) . The increase of the surplus was determined by the growth of LTL 187.7 million in transfers from the EU support funds.
In January - August 2007, positive surplus on the balance of current transfers was LTL 1.88 billion, a year-on-year increase of 26.7 percent. Over the reported period, the transfers from the EU support funds grew by 19.8 percent, while remittances of private persons went up by 34.6 percent.
Capital and financial account balance. In August 2007 (excluding official reserve assets), a decrease was registered in the investments of domestic economic entities abroad (their flow made up LTL 468.1 million). In Lithuania, foreign investment flow was LTL 2.75 billion, therefore the net flow of all investments (both outward and inward investment) reached LTL 2.28 billion, a month-on-month increase by more than 6 times. Such a substantial increase in August of net investment flow was determined by the funds received in the Bank of Lithuania under repo transaction.
In January-August 2007, the outward investment flow equalled to LTL 2.8 billion, while the inward investment flow amounted to LTL 12.7 billion. Compared to January-August 2007, the outward investment flow contracted by 28.6 percent, while inward investment flow went up by 38.3 percent. In August, capital transfers made up LTL 341.9 million, while January-August capital transfers made up LTL 1.07 billion compared to LTL 494.7 million in January-August 2006.
In August 2007, foreign direct investment flow in Lithuania reached LTL 336.2 million. Taking into account foreign direct investment abroad made by domestic economic entities, August net foreign direct investment flow made up LTL 242.2 million. Meanwhile, January - August foreign direct investment flow in Lithuania reached LTL 3.4 billion litas (LTL 2.1 million in corresponding period in 2006) , while their net flow was LTL 2.8 billion litas.
The net investment portfolio flow was negative both in August and January - August 2007, amounting to LTL 412.9 million and LTL 2.4 billion, respectively. It was a result of an increase of Lithuania’s investment abroad.
Net flows of other investment and financial derivatives were positive both in August, when it made up LTL 2.5 billion, and January-August, when it made up LTL 9.4 billion. Compared to January-August 2006, the net flows of other investment increased by 95.7 percent. The increase of liabilities of domestic MFIs had the largest impact on the total positive flow of this investment. The net flows of investment of this sector reached LTL 5.3 billion in January-August 2007, an increase of 2.5 times compared to the corresponding period in 2006.
In August 2007, an increase was registered in the official reserve assets and their flow in the balance of payments made up LTL 1.9 billion. This substantial increase in official reserve assets was driven by the funds received in the Bank of Lithuania from repo transactions. The said funds contributed to an increase in short-time external liabilities, therefore official reserve assets, less short-time external liabilities, increased by LTL 418.7 million litas.
Also, official reserve assets grew as a result of an increase of currency in circulation and deposits of other MFIs with the Bank of Lithuania respectively by LTL 141.4 million and LTL 71.3 million, and an LTL 71.3 million hike of the central government deposits with the Bank of Lithuania, as well as a rise of LTL 64.3 million in other factors.