Estonia, EU – Baltic States, Financial Services, Foreign trade , Investments

Estonia's current account balance has been negative in the first quarter of the year for seven consecutive years now. This is mainly a result of seasonal factors, as the foreign trade surplus for services is usually smaller in the first quarter because of smaller exports of travel and transport services. On the other hand, the net outflow of income transfers is bigger than in any other quarter of the year then because of the big transfers made into the budget of the European Union.

The deficit on the current account was more than double the figure for the first quarter of 2015 mainly as a result of an increase in the deficit on the goods account. The surplus of the goods and services account contracted to 28 million euros from a surplus of 133 million euros registered in the first quarter of 2015. Exports of goods and services were down by 1%, whereas imports were up by 1%. The goods deficit was 226 million euros in the first quarter, and it increased mainly as a result of a 2% increase in the imports of goods and a decrease of 1% in the exports of goods.

The deficit was increased the most by machinery and equipment, transport vehicles, and mineral products. Imports of goods crossing the Estonian border were bigger by 322 million euros than exports going the other way. Estonian merchants earned 96 million euros from the intermediation of goods in third countries. The turnover of goods under merchanting was down over the year by more than a quarter and accounted for 14% of the total turnover on the goods account, compared with 19% in the first quarter of 2015.

As the volume of construction services bought in has been steadily shrinking of late, the surplus in construction services increased. Exports of most types of services were again bigger than imports, but that surplus is shrinking because of a continuing increase in imports.

The net outflow from investment and other income was 140 million euros, marking a reduction by a quarter from the first three months of last year. This was because the net outflow of direct investment income declined, with non-residents' direct investment income from Estonia and that of residents from abroad moving lower alike.

The agricultural subsidies from the European Union were somewhat larger than in the first quarter of 2015, but the net inflow of labor income declined.

The surplus on the capital account was 28 million euros, equaling one quarter the of the surplus on the capital account in the same quarter last year. The sharp drop came about mainly because large amounts were realized in the first quarter of 2015 from the sale of emissions quotas, but not this year. Likewise, large infrastructure projects were completed at the end of last year, which means that less support was received and used from the European Union Structural Funds.