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The current account surplus passed half a billion euros last year for the first time ever. The large surplus was caused by large-scale exports of goods and services, which picked up particularly in the second half of the year. The surplus in the current account was around 100 mln euros more than in 2015 mainly because the outflow of income was smaller. The increase in the current account surplus was clearly slower than in recent years, which is in line with Eesti Pank’s economic forecast.

Alongside the good results for exports there was continuing growth in the fourth quarter of 2016 in imports of goods and services.Imports of goods increased by 3% over the whole year, and imports of services by 8%. In the first half of the year the growth in goods imports was underpinned by capital goods brought in as investments, but the rate of growth could not be maintained in the second half of the year and less was imported as capital goods in the fourth quarter than a year earlier. This indicates companies are being careful in investing and overall investment activity is recovering more modestly than expected. This is confirmed by the financial account of the balance of payments, which indicates that the direct investment made in the equity capital of foreign-owned companies was less than the amount taken out from them, meaning no new money came into the country for investment in 2016.

Estonian assets abroad grew more in 2016 than external liabilities, so Estonia was a net lender for the whole year. The net international investment position, which is the difference between external assets and external liabilities, climbed in consequence to -37% of GDP for the whole year. The current account surplus gives hope that the net investment position may improve, and if the current trend were to continue, Estonia could reach the -35% recommended by the European Commission within a few years1.

1 The European Commission looks at the net international investment position as one of the indicators of possible imbalances in an economy, and it has set the threshold for where the danger appears at -35% of GDP.