Analytics, Economics, EU – Baltic States, Export, GDP, Industry, Investments, Lithuania, Statistics

The surplus balances of services and secondary income in Q2 2016 did not offset the increasing foreign demand and primary income balance deficits; thus, a current account deficit of EUR 389.6 mln built up. The current account deficit for the first half year amounted to EUR 417.3 mln.

The negative EUR 175.2 mln financial account balance in Q2 2016 was due to liabilities to non-residents increasing more than claims. At the end of Q2 2016, the negative international investment position balance (EUR 17.9 bln) showed that Lithuania is a debtor vis-a-vis the rest of the world. The gross debt amounted to EUR 31.4 bln, or 83.5% of GDP, while the net debt — EUR 11.3 bln, or 30.1% of GDP in this period.

It should be noted that in drawing up the balance of payments for Q2 2016 the balance of payments data for the 2014–2015 quarters and for Q1 2016 was recalculated, the historical data for the quarters of 2004–2007 — revised. Current account. The country’s balance of payments current account balance (CAB) was in deficit, which amounted to EUR 389.6 mln (–4.1% of GDP) in Q2 and EUR 417.3 mln (–2.3% of GDP) in H1 2016. For four quarters (Q3 2015 to Q2 2016), the CAB deficit amounted to EUR 301.8 mln (–0.8% of GDP).

Foreign trade. In Q2 2016, the foreign trade deficit in the country’s balance of payments amounted to EUR 670.8 mln, increased by EUR 373 mln q-o-q. This was due to growth in the import of goods (12.2%), which outpaced growth in the export of goods (5.5%). In H1 2016, the foreign trade deficit decreased by EUR 326.6 mln, because the export and import of goods fell by 2.7% and 5.2% respectively.

In Q2 2016, as compared to Q1 2016, exports of goods to European Union (EU) Member States and Commonwealth of Independent States (CIS) countries increased by 6.6% and 12.1% respectively. The import of goods from the EU and CIS countries grew as well in the reporting period — by 13.6% and 13.9% respectively. In H1 2016, the export of goods to EU and CIS countries dropped by 3.9% and 12.5% respectively y-o-y. Imports of goods from EU countries in the reporting period rose by 0.3%, whereas those from CIS countries contracted by 22%.

Services. In Q2 2016, export of services grew by 16.7% and import of services by 11.5% q-o-q, thus the balance of services surplus increased by 28.2% and was EUR 579.7 mln. In H1 2016, growth in the export of services increased by 11.7%, while the import of services — by 4.2%, thus the total balance of services surplus increased by 31.3 % y-o-y.

 In Q2 2016, the largest was the road transport balance surplus (EUR 330.8 mln), while the sea transport services balance posted the largest deficit (EUR 27.9 mln). In H1 2016, the road transport balance surplus was EUR 626.3 mln, while the sea transport services deficit was EUR 42.7 mln. In Q2 2016, the export of transport and travel services accounted respectively for 56.8% and 16.7% of the total export of services (in Q2 2015 59.2% and 18% respectively). The import of transport and travel services accounted respectively for 52% and 18.6% of the total import of services (in Q2 2015 55.8% and 18.3% respectively).

In Q2 2016, the export of services to EU countries accounted for 65.4% of the total export of services, while the import of services from EU countries — 63.1% of the total import of services. Export to CIS countries accounted for 21.2% of the total export of services, while import from CIS countries for 22.9% of the total import of services.

Primary income. In Q2 2016 the recorded primary income balance deficit (EUR 538.9 mln) resulted from the investment income balance being in deficit (EUR 523.7 mln). In this period, both the balances of compensation of employees and primary income were negative, amounting to EUR 6.2 mln and EUR 9 mln respectively. In H1 2016 the primary income balance deficit was EUR 858.2 mln, an increase of 0.8% y-o-y.

 In Q2 2016, compared to the previous quarter, the investment income balance deficit increased by 33.9%, while in H1 2016 it decreased by 1.6%, y-o-y. In Q2 2016, the investment income balance deficit decreased by EUR 1.9 mln, or 1.9% q-o-q. The labour compensation of employees balance, as in Q1 2016, was in deficit (EUR 6.2 mln) and increased by EUR 2.7 mln q-o-q.

 In Q2 2016, the negative balance of other primary income amounted to EUR 9 mln, although in Q1 a EUR 75.1 mln surplus was recorded, a result of larger EU subsidies for agriculture. Therefore, a EUR 66.1 surplus formed in H1.

Secondary income. In Q2 2016 the secondary income balance posted a EUR 240.3 mln (2.5% of GDP) surplus, while in H1 this surplus was EUR 377.7 mln (2.1% of GDP). In Q2 2016, compared to the first quarter, the secondary income surplus balance increased by EUR 103 mln, which was a result of increased transfers from EU support funds (EUR 55.9 mln), while Lithuania’s calculated contributions (the Union’s own resources based on VAT and gross national income) to the EU budget decreased (EUR 47.2 mln). In Q2 2016, personal transfers from abroad increased by EUR 9.7 mln, while personal transfers from Lithuania decreased by EUR 2.4 mln.

Capital account. The main source for the capital account is transfers received from EU structural support funds dedicated to finance investment projects. In Q2 and H1 2016 the surplus balance of the capital account was EUR 135.2 mln and EUR 170.1 mln respectively. The capital account balance for the first half year of 2016 decreased by EUR 205.3 mln y-o-y, or 2.2 times.

Financial account. In Q2 2016, unlike in Q1, net investment outflows (excluding official reserve assets) amounted to EUR 32.2 mln In H1, as in Q1, with the decrease in net other investment, investment outflows (EUR 1.5 bln) built up.