Balance of payments, 4th quarter 2021
Increase in imports of services decreased Sweden’s current account balance
Statistical news from Statistics Sweden 2022-03-04 8.00
The current account surplus amounted to SEK 68.5 billion in the fourth quarter of 2021, which is a decrease of SEK 5.2 billion compared with the fourth quarter of 2020. Trade in goods and services contributed to a decreased surplus, which was partially offset by increases in the primary and secondary income.
The financial account shows that net borrowing with the rest of the world amounted to SEK 197.7 billion in the fourth quarter of 2021. Sweden’s net external assets position, presented in the international investment position, amounted to SEK 958.1 billion at the end of the quarter.
What is the balance of payments?
The balance of payments is a statement of all Swedish transactions with the rest of the world. It presents exports and imports of goods and services. It also includes a description of changes in financial assets and liabilities with the rest of the world. The balance of payments consists of the current account, the financial account, and the capital account. The component parts of the balance of payments and related terms are explained under Definitions and explanations, at the end of this item of statistics news.
Current account surplus as share of Sweden’s GDP
In the fourth quarter of 2021, Sweden’s current account as a share of GDP decreased somewhat to 5.5 percent of Sweden’s GDP, calculated as a moving average over the last four quarters.
Comparisons between periods in the current account are made using the corresponding quarter the previous year.
Imports and exports of goods increased
Trade in goods showed a surplus of SEK 55.9 billion in the fourth quarter of 2021. This is a decrease of SEK 4.0 billion compared with the fourth quarter of 2020. Exports of goods amounted to SEK 503.4 billion, which is an increase of SEK 71.1 billion compared with the corresponding quarter a year ago. Imports of goods amounted to SEK 447.5 billion, up by SEK 75.1 billion in a corresponding comparison. Trade in goods is now at higher levels compared to before the COVID-19 pandemic.
Surplus in merchanting, which is included in the balance on trade in goods, increased by SEK 0.7 billion compared with the fourth quarter of 2020. The surplus thus amounted to SEK 40.6 billion in the fourth quarter of 2021.
Imports and exports of services increased
Trade in services noted a surplus of SEK 2.3 billion. This can be compared with a surplus of SEK 13.9 billion in the corresponding quarter last year. Exports of services amounted to SEK 202.0 billion, up by SEK 20.2 billion compared with the fourth quarter of 2020. At the same time, import of services noted an increase of SEK 31.8 billion in a corresponding comparison, and amounted to SEK 199.7 billion. Trade in services now exceeds the pre-pandemic levels.
Primary income surplus widened
Primary income, which consists mainly of compensation of employees and investment income, presented a surplus of SEK 31.2 billion in the fourth quarter of 2021. This surplus widened by SEK 2.4 billion compared with the corresponding quarter a year ago. Investment income is the main part of primary income that contributed to this change through an increased surplus. Surplus in investment income went from SEK 26.0 billion in the fourth quarter of 2020 to SEK 28.0 billion in the fourth quarter of 2021.
Portfolio investment contributed a surplus of SEK 4.2 billion to investment income, a decrease of SEK 0.4 billion compared with the corresponding quarter a year ago. Investment income on direct investment contributed a surplus of SEK 25.8 billion, which is an increase of SEK 3.2 billion in a corresponding comparison.
Secondary income deficit narrowed
Secondary income, which includes international cooperation and donations and contributions to the EU, presented a deficit of SEK 20.9 billion. This deficit narrowed by SEK 8.0 billion compared with the corresponding quarter a year ago. The decreased deficit was mainly due to transactions with the EU, where contributions from the EU increased and fees to the EU decreased.
Net borrowing in the financial account
The financial account presented net borrowing amounting to SEK 197.7 billion in the fourth quarter of 2021. Net lending and net borrowing refer to the overall balance on the financial account.
In the financial account, portfolio investment, direct investment and reserve assets noted net lending, while other investment and financial derivatives noted net borrowing.
Direct investment increased both in Sweden and abroad
Net lending in direct investment amounted to SEK 29.6 billion during the quarter. Foreign direct investment in Sweden increased by SEK 66.5 billion and Swedish direct investment abroad increased by SEK 96.1 billion.
Portfolio investment decreased in Sweden and abroad
Net lending in portfolio investment amounted to SEK 160.0 billion during the quarter. Foreign investors decreased their portfolio investment in Sweden by SEK 230.7 billion, and Swedish investors decreased their portfolio investment abroad by SEK 70.8 billion.
Other investment decreased in Sweden and abroad
Net borrowing in other investment corresponded to SEK 365.5 billion. Swedish other investment abroad decreased by SEK 567.7 billion, and foreign other investment in Sweden decreased by SEK 202.2 billion.
Financial derivatives and reserve assets
Net borrowing in financial derivatives amounted to SEK 22.3 billion. Reserve assets noted increased net lending corresponding to SEK 0.5 billion.
Net assets in Sweden’s international investment position decreased
Sweden’s net external assets position amounted to SEK 958.1 billion, which is a decrease compared with SEK 1129.2 billion in the previous quarter. Other investment is the part that contributed the most to this decrease through increased net liabilities.
Swedish external assets and liabilities increased
Swedish external liabilities increased by SEK 348.0 billion compared with the previous quarter and amounted to SEK 15 936.0 billion. Swedish external assets amounted to SEK 16 894.1 billion, an increase of SEK 176.8 billion compared with the previous quarter.
Direct investment, portfolio investment, and financial derivatives increased both in Sweden and abroad. Reserve assets also increased abroad. Other investment decreased both in Sweden and abroad.
Sweden’s largest net external assets are in reserve assets
The largest net external assets were in reserve assets, and direct investment. The largest net liabilities were in portfolio investment.
Revisions
The time series for the Balance of Payments and the international investment position has been revised from Q1 2018.
The Balance of Payments adheres to a predetermined revision policy, see Section 2.3 in the 2022 Quality Declaration."Kvalitetsdeklarationen 2022 (pdf)".
In a compilation of the balance of payments and the international investment position, data based on forecasts are used in some cases. These statistics will be updated as results are received. If new data is added or in the case of any methodological changes, further revisions are carried out as necessary.
Revisions carried out in connection with publication of the fourth quarter of 2021 are listed in the tables on revisions by account item for the balance of payments and the international investment position, respectively.
Definitions and explanations
The current account and the financial account record real and financial transactions with regard to the rest of the world. Only proper transactions are recorded; value changes, such as exchange rate fluctuations are excluded.
The current account shows the trade in goods (foreign trade in goods), the trade in services (foreign trade in services), primary income (compensation to employees, investment income, other primary income), and secondary income (current transfers). Surplus and deficit in the current account refer to the difference between Sweden’s exports and Sweden’s imports. A positive outcome results in a surplus, while a negative outcome results in a deficit. Comparisons between periods in the current account are always made using the corresponding quarter the previous year, due to seasonal patterns in data.
The financial account consists of direct investment, portfolio investment, financial derivatives, other investment, and reserve assets. Sweden can acquire and dispose of financial assets abroad. All transactions during the quarter concerning external assets show Sweden’s change in net external assets. Sweden can also borrow and repay financial external liabilities. All transactions during the quarter concerning external liabilities show Sweden’s change in net external liabilities. The difference between Sweden’s change in net external assets and Sweden’s change in net external liabilities can be positive or negative, and shows net lending and net borrowing, respectively.
The capital account records Sweden’s capital transfers and transfers of non-financial assets with regard to the rest of the world. Compared with other parts of the balance of payments, amounts in the capital account are usually small.
The difference between Sweden’s financial external assets and liabilities position is the net of Sweden’s international investment position, which can be positive or negative.
An increase or decrease in assets describes Sweden’s external assets. An increase or decrease in liabilities describes Sweden’s external liabilities.
Merchanting, which forms a part of the trade in goods, refers to triangular trade in which goods are purchased and sold abroad without the good crossing a Swedish border.
Statistical Database
More information is available in the Statistical Database
Feel free to use the facts from this statistical news but remember to state Source: Statistics Sweden.