In STATEC's latest report, Luxembourg's balance of payments at the end of the first quarter of 2020 recorded a surplus of €956 million.
According to the first provisional results, the current account for the first quarter of 2020 ended with a surplus of €956 million, an increase of more than €3 billion compared to the same period of the previous year. This change is mainly explained by investment income, which can fluctuate considerably from quarter to quarter.
Luxembourg's goods deficit stood at minus €237 million and only widened slightly in the first quarter of 2020 (minus €58 million). In terms of exports and imports of goods, however, there have been significant decreases. Firstly, net international trade exports (purchases and sales of goods without passing through Luxembourg) fell by almost 9% (minus €121 million). In terms of general goods (excluding trading), the fall in exports came close to 10% (minus €381 million) and mainly concerned manufactured articles, machinery and equipment. As for imports, which plunged 8.2% (minus €445 million), almost all products were affected by the decline. Imports were more impacted than exports mainly due to petroleum products for which the fall in prices was added to those of volumes.
The balance of international trade in services was down by almost 2% in the first quarter of 2020 (minus €114 million), while exports and imports varied only slightly (with -0.4 and 0.1% respectively). At the level of sub-headings, however, the developments were more contrasted. Trade in non-financial services was down sharply, both for exports (-6%) and for imports (-5.6%). Personal, cultural and recreational services, other business services and fees for the use of intellectual property were down. International trade in financial services, on the other hand, rose sharply, up 4.3% for exports and 6% for imports. This change is explained by the significant appreciation of the average assets managed by investment funds during the period under review (+6.2%), despite the sharp drop in March 2020 due to the shock on the financial markets, related to the health crisis.
In addition, in the first quarter of 2020, direct investment flows remained characterised by disinvestment operations both for assets (minus €95 billion) and for commitments (minus €79 billion).
Regarding portfolio investments, in a context of falling stock prices following the COVID-19 pandemic, non-residents have turned away from Luxembourg equities (mainly UCI shares), with net sales going up €68 billion in the first quarter of 2020. Luxembourg debt securities' net sales also went up €25 billion during this period. For their part, Luxembourg residents reduced their investments in foreign equity securities which ended in net sales of €58 billion in the first quarter of the year. Similarly, foreign debt securities increased net sales by €111 billion over the same period. Portfolio investment flows thus resulted in net capital inflows of €75 billion in the first quarter of 2020.