The current account deficit measured 40.8 b.kr. in Q1/2024. This represents a deterioration of 11.7 b.kr. relative to the previous quarter and 26.2 b.kr. relative to Q1/2023. There was a deficit on goods trade in the amount of 55.7 b.kr and a 13 b.kr. surplus on services trade (See the Statistics Iceland webpage).
The surplus on primary income amounted to 13.4 b.kr., whereas there was a 11.5 b.kr. deficit on secondary income (Table 1). This is included in new information published on the Central Bank of Iceland website, showing the preliminary balance of payments in Q1/2024 and the external position of the economy at the end of the quarter.
Table 1: Balance of payments (b.kr.)
| 2024/1 | 2023/4 | 2023/3 | 2023/2 | 2023/1 | |
|---|---|---|---|---|---|
Current account balance | -40.8 | -29.2 | 78.3 | 6.0 | -14.6 |
Balance on goods | -55.7 | -77.5 | -84.7 | -83.4 | -44.9 |
Balance on services | 13.0 | 28.5 | 148.0 | 86.1 | 25.7 |
Balance on primary income | 13.4 | 33.6 | 27.9 | 15.9 | 16.9 |
Secondary income, net | -11.5 | -13.7 | -12.9 | -12.6 | -12.4 |
Capital account | -0.8 | -1.4 | -0.7 | -0.9 | -1.3 |
Financial account | 4.3 | 71.2 | 57.0 | -22.5 | -45.0 |
Direct investment | 0.0 | 98.8 | -125.1 | 0.7 | -13.8 |
Portfolio investment | -201.8 | 90.6 | 99.6 | 74.8 | 25.8 |
Derivatives | 0.1 | -3.7 | -6.9 | -2.6 | -2.8 |
Other investments | 86.2 | -118.5 | 95.6 | -68.9 | -32.3 |
International reserves | 119.8 | 4.0 | -6.3 | -26.4 | -21.9 |
Net errors and omissions | 45.9 | 101.7 | -20.6 | -27.6 | -29.1 |
At the end of the quarter, the net international investment position was positive by 1,775 b.kr., or 41.4% of GDP. It improved by 201 b.kr., or 4.6% of GDP, during the quarter. External assets totalled 6,194 b.kr. at the end of the quarter, and external liabilities were 4,420 b.kr. The position improved by 4 b.kr. during the quarter, owing to financial transactions, as foreign assets increased by 214 b.kr. and foreign liabilities by 210 b.kr.
Price and exchange rate movements during the quarter increased asset values by 201 b.kr. and increased the value of liabilities by 5 b.kr., thereby yielding an improvement of 196 b.kr. in the net external position. The króna appreciated by just under 0.5% in terms of the trade-weighted index. Prices in foreign securities markets rose by 8.5% between quarters, while prices in the domestic stock market fell by 3%.
Table 2: Quarter-on-quarter change in international investment position (b.kr.)
| Position at end Q1/2024 | Financial account | Exhange rate and price changes | Other changes | Position at end Q4/2023 | |
|---|---|---|---|---|---|
Foreign assets, total | 6,194 | 214 | 201 | 9 | 5,770 |
Direct investment | 1,001 | 21 | 0 | 0 | 979 |
Portfolio investment | 3,517 | -26 | 207 | 0 | 3,336 |
Derivatives* | 9 | 0 | -8 | 0 | 17 |
Other investments | 755 | 99 | -1 | 8 | 648 |
International reserves | 912 | 120 | 3 | 0 | 790 |
Foreign liabilities, total | 4,420 | 210 | 5 | 8 | 4,197 |
Direct investment | 1,511 | 21 | 7 | -4 | 1,487 |
Portfolio investment | 1,606 | 176 | -4 | 0 | 1,435 |
Derivatives* | 14 | 0 | -3 | 0 | 18 |
Other investments | 1,287 | 13 | 5 | 13 | 1,256 |
Net international investment position (NIIP) | 1,775 | 4 | 193 | 1 | 1,573 |
% of GDP | 41.4 | 0.1 | 4.6 | 0.0 | 36,7 |
* Other changes are included under price and exchange rate changes for derivatives.