Luxembourg Balance of Payments Falls 76% in Q1 2023

The Banque Centrale du Luxembourg (BCL) and STATEC, Luxembourg's national statistics office, have announced that, according to initial provisional results, the state's current account balance for the first quarter of 2023 showed a surplus of €242 million, a decrease of 76% compared to the same period of 2022 (€773 million).

The goods deficit stood at €161 million and decreased slightly in the first quarter of 2023 by €183 million.

Exports and imports of goods, however, showed minor increases of 3%, respectively remained stable at 0%. On the other hand, net exports from goods under merchanting (purchases of goods abroad and their resale abroad) increased up to 44% (€230 million). For general merchandise (i.e. excluding merchanting), exports went down 1% (€45 million), while imports remained stable with 0% (€3 million).

The balance of international trade in services decreased by 16% in the first quarter of 2023 (down €1,032 million), because exports have dropped by 3% and imports have remained nearly stable with 0.4%. At the level of sub-items however, evolutions were more contrasting. Trade in non-financial services dropped mainly for exports (down 9%) and less for imports (down 1.8%). Meanwhile, international trade in financial services progressed with 2.7% for exports and 2.9% for imports.

In the financial account for the first quarter of 2023, direct investment flows remained characterised by large disinvestment operations for both assets (down €30.5 billion) and liabilities (down €35 billion). These disinvestments concerned a small number of SOPARFIs (financial holding companies) that continued their operations to restructure, terminate or relocate their activities.

Regarding portfolio investments, transactions in Luxembourg equities resulted in net inflows of €41 billion in the first quarter of 2023, compared with net outflows of €13 billion in the first quarter of 2022. On the other hand, Luxembourg debt securities experienced net inflows of €10 billion in the first quarter of 2023, compared with net outflows of €2 billion for the same period in 2022. For their part, transactions in foreign equity securities also resulted in net outflows of €7 billion in the first quarter of 2023, compared to net sales of €16 billion in the first quarter of 2022. Net sales in foreign debt securities have reduced during the first quarter of 2023, reaching €1 billion in the first quarter of 2023, compared to net sales of €39 billion during the first quarter of 2022.