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 showed a surplus of €4,906 million at the end of the first three quarters of 2023.
This represented a decrease €730 million compared to the same period of the previous year.
The goods deficits stood at €313 million and decreased in the first three quarters of 2023 (+€829 million). Exports witnessed stability while imports decreased by 4%. The net exports from international trade (purchases and sales of goods without passing through Luxembourg) increased (+€640 million). At the level of general merchandise (i.e. excluding trading), exports amounted to a decrease of 3.6% (-€618 million), while imports decreased similarly by 4.2% (-€807 million).
The balance of international trade in services decreased by 9.3% for the first three quarters of 2023 (-€2,008 million), which can be explained by the fact that exports (down 0.4%) declined while imports increased (up 2.0%). At the level of the subsections, the developments were varied. Trade in non-financial services declined for exports (down 3.3%), while imports increased (up 1.2%). International trade in financial services, for their part, showed moderate growth, with 2.2% for exports and 3.0% for imports. According to BCL and STATEC, this development is mainly explained by the increase in average assets managed by investment funds during the period under review (up 2%).
In the financial account, for the first three quarters of 2023, direct investment flows were characterised by significant disinvestments both for assets (-€91 billion) and for commitments (-€143 billion). These divestments only concerned certain SOPARFIs, which are currently continuing their restructuring, cessation or relocation of their activities.
Concerning portfolio investments, holdings in Luxembourg stocks recorded net inflows, reaching €41 billion for the first three quarters of 2023, compared to net outflows amounting to €91.5 billion for the same period in 2022.
For their part, transactions in foreign equity securities recorded net sales of €41 billion, compared to divestments of €89 billion during the first three quarters of 2022. Concerning foreign debt securities, they are experiencing net acquisitions during the first three quarters of 2023 (€67 billion), compared to net sales of €134 billion for the same period in 2022. Finally, Luxembourg debt securities record net outflows of €76 million for the first three quarters of 2023, compared to net purchases of €5 billion for the same period in 2022. In the context of increasing interest rates, investors are partially reallocating their portfolio towards debt securities at the expense of stocks, BCL and STATEC noted.
