2022-12-21
Today, the Bank of Lithuania released the balance of payments data for Q3 2022, which shows that:
the deficit on the current account balance (CAB) shrank by 17.8%, compared to the second quarter of 2022, and amounted to €849.7 million, or 4.5% of gross domestic product (GDP). The deficit on the CAB was determined by deficits on foreign trade and primary income balance, which were not offset by a surplus balance of services and a reduced, albeit positive secondary income balance. Compared to the second quarter, due to an increase in imports and exports of goods, the foreign trade deficit went up by 1.3% to €2.0 billion. Contrary to the foreign trade deficit, primary income deficit narrowed by 12.8% and equalled €709.6 million. This change was mainly due to a decrease in the deficit on the investment income as a result of a reduction of dividends paid to foreign investors as well as an increase in Lithuania’s reinvestment abroad. Compared to the previous quarter, as export of services grew faster than imports, by 9.1% and 8.9% respectively, the surplus on the balance of services went up by 9.5% and stood at €1.8 billion. The balance of other business services recorded the largest increase among services (€57.9 million or 47.4%), amounting to €180.0 million. A year ago, the CAB was in surplus and stood at €141.8 million, or 0.9% of GDP (see Chart 1);
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the surplus on the capital account contracted by 15.3%, compared to the previous quarter, and amounted to €176.9 million. This reflects lesser inflows (24.5%) from the European Union structural support funds dedicated to financing investment projects. During the respective quarter of 2021, the surplus on the capital account equalled €161.8 million;
over the reporting period, the net flow of financial account investment was negative and stood at €666.2 million, or 3.5% of GDP. It was due to negative net flows of portfolio investment and direct investment (€499.8 million and €386.2 million respectively), which were not offset by an increase of €131.4 million in official reserve assets and a positive flow of other investment (€74.7 million). A year ago, the net flow of financial account investment was positive and amounted to €972.7 million, or 6.4% of GDP (see Chart 2);
the net international investment position was negative and amounted to €5.5 billion at the end of the third quarter, or 8.6% of GDP. It was also negative a year ago, amounting to €5.0 billion, or 9.3% of GDP;
at the end of September, Lithuania’s gross external debt stood at €44.7 billion, or 69.1% of GDP, while the net external debt amounted to -€1.8 billion, or 2.7% of GDP, i.e. Lithuania’s assets abroad exceeded foreign liabilities. A year ago, Lithuania’s gross external debt stood at €39.0 billion, or 72.0% of GDP, while the net external debt amounted to -€2.6 billion, or 4.9% 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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