2023-06-21
Today, the Bank of Lithuania released the balance of payments data for Q1 2023, which shows that:
the current account balance (CAB) was in surplus, unlike in the previous quarter, and amounted to €114.8 million, or 0.7% of gross domestic product (GDP). It was mainly due to a drop in foreign trade deficit, which was offset by a balance of services, which was in surplus, albeit slightly narrowed. In contrast to the fourth quarter of 2022, more rapid fall in imports of goods (17.9%), as compared to exports of goods (13.6%), put downward pressure on the foreign trade deficit, which stood at €1.3 billion. Contrary to the foreign trade deficit, primary income deficit went up by 18.4% quarter on quarter and equalled €154.4 million. This development was mainly affected by the fact that the surplus on other primary income balance decreased by €548.9 million as a result of a decline in European Union (EU) subsidies for agriculture. Compared to the previous quarter, as import of services decreased more than exports (by 18.3% and 14.9% respectively), the surplus on the balance of services went down by 8.1% and stood at €1.5 billion. It was influenced by a significant fall (€267.0 million) in the balance of transport services as a result of a 18.1% decrease in exports of these services.
For comparison: a year ago, the CAB was in deficit and stood at €800.3 million, or 5.5% of GDP at current prices (see Chart 1);
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the surplus on the capital account narrowed by a factor of 3.2 quarter on quarter and amounted to €151.3 million. This reflects smaller inflows (€335.7 million or 3.1 times) from the EU structural support funds dedicated to financing investment projects. In the first quarter of 2022, the surplus on the capital account equalled €123.1 million;
over the reporting period, the net flow of financial account investment was positive and stood at €454.9 million, or 2.8% of GDP. It was triggered by a positive net flow of portfolio investment of €1.4 billion and an increase of €639.5 million in official reserve assets. A positive increase in the said investment was not offset by negative net flows of other and direct investment and derivatives (€1.5 billion, €50.1 million and €27.4 million respectively).
For comparison: in the first quarter of 2022, the net flow of financial account investment was negative and amounted to €2.5 billion, or 16.9% of GDP at current prices (see Chart 2);
the net international investment position was negative and amounted to €3.4 billion, or 5.0% of GDP, at the end of the first quarter. It was also negative a year ago, amounting to €6.1 billion, or 10.4% of GDP at current prices;
at the end of the reporting period, Lithuania’s gross external debt stood at €46.2 billion, or 67.7% of GDP, while the net external debt amounted to -€3.9 billion, or 5.7% of GDP, i.e. Lithuania’s assets abroad exceeded foreign liabilities.
For comparison: a year ago, Lithuania’s gross external debt stood at €42.9 billion, or 73.1% of GDP, while the net external debt amounted to -€1.7 billion, or 2.9% of GDP.
Chart 1. CAB and its composite flows as a percentage of GDP
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Chart 2. Net financial account investment flows as a percentage of GDP
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Detailed data on the country’s balance of payments and international investment position as well as external debt is available on the Bank of Lithuania website (under External statistics).
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