Largest trade deficit since 1981
Preliminary figures show that the balance of goods and services in the third quarter of 2020 ended at NOK -20 billion. This is an all-time low. The trade deficit should be seen in the light of the corona pandemic. Both exports and imports are reduced significantly.
The economic development in the third quarter is characterized by the ongoing corona pandemic. Preliminary figures show a significant deficit on the goods and services balance. Both exports and imports are affected by the downturn: if we sum up exports for the first three quarters of the year and compare them with the exports for the first three quarters in 2019, we see a decline of more than 15 percent. The total export deficit is particularly characterized by lower export revenues from oil and gas exports, and this, together with so called “travel” (residents purchases abroad when travelling), account for about 801 per cent of the decline in exports. The same calculation for the import side shows that travel accounts for almost 901 percent of the import decline.
Exports and imports
The export value of goods and services in the third quarter of 2020 is currently estimated at NOK 255 billion. This is almost NOK 49 billion lower than in the same quarter last year but NOK 16 billion higher than in the second quarter of 2020. Low oil prices and travel restrictions led to low export revenues, as they did in the previous quarter.
Total imports are estimated at almost NOK 277 billion for the third quarter of 2020, about NOK 40 billion lower than in the third quarter of the previous year but NOK 17 billion higher than in the second quarter of 2020. The decline is primarily due to the drop in services trade, especially Norwegian consumption abroad, which fell by more than 87 per cent measured against the same quarter the year before, because of travel restrictions. This amounts to about NOK 39 billion.
For more information about exports and imports, including price and volume considerations and seasonal adjustments, please see the quarterly national accounts.
The balance of income and current transfers
Preliminary figures show a decline in both income and expenditure abroad in the third quarter of 2020, measured against the same quarter the year before. This must also be seen in the light of the corona pandemic. In the third quarter, just as in the second quarter, the decline in revenues was lower than the decline in expenditures. Nevertheless, the balance of interest and current transfers ended at a NOK 32 billion in the third quarter, which was almost NOK 10 billion more than in the third quarter of 2019. The decline in income as well as expenses was mostly driven by a fall in interest payments.
The financial account
At the end of the third quarter of 2020, Norway’s net foreign assets amounted to NOK 9,554 billion. This was an increase of NOK 316 billion from the previous quarter.
During the third quarter of 2020, the global stock markets had an upswing, and the rise in market prices highly contributed to the increase in the value of Norway’s assets abroad. This applied especially to Norwegian portfolio investment. At the end of the quarter, portfolio investment abroad amounted to NOK 12,840 billion. This was a rise of NOK 309 billion from the previous quarter, consisting mostly of revaluations due to market price changes.
The Norwegian krone appreciated against several foreign currencies during the last quarter, compared to the end of the previous quarter. Other changes were therefore affected negatively due to exchange rate changes.
Net lending had little impact on the rise of net foreign assets in the third quarter. Norwegians reduced their investments abroad by NOK 1 billion during this quarter, and at the same time reduced their liabilities towards the rest of the world by NOK 50 billion, resulting in a net lending of NOK 49 billion.
Good data capture and quality
Many parts of the economic statistics have been affected by the corona pandemic, and the uncertainty is unusually high. However, the international accounts have been less affected. Providers of primary data have been able to collect the necessary information according to the planned schedule, and the data quality seems satisfactory. The uncertainty about the foreign accounts for the second quarter of 2020 does therefore not seem to be greater than usual.
Improved data input in the financial account
As of the fourth quarter of 2019, the reporting of country and currency breakdown on equity investment abroad is mandatory. This information is now a basis for the calculation of other changes/revaluations due to exchange rate changes in equity investment abroad, for those valued at market or equity value. This in turn has improved the calculation of investment flows in equity abroad, which has now been revised back to firstt quarter of 2018.
1 Tallene er rettet