Banque nationale de Belgique : Press release - Net international investment position and balance of payments financial account (2023-IV

2024-03-28

PRESS RELEASE

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General information

International investment position and balance of payments financial account in 2023

• • The net international investment position increased to €381 billion or 65% of GDP.

• • In 2023, Belgium was a net borrower from the rest of the world, for an amount of €6.5 billion or 1.1% of GDP.

Amounts outstanding

The net international investment position (NIIP) rose from €320 billion at the end of 2022 to €381 billion at the end of 2023. Net external borrowing (-€6.5 billion) and negative exchange rate effects (-€12.0 billion) were fully offset by strong positive price effects (€53.9 billion).

Net portfolio investment remained the main component of the positive NIIP, with a share that continued to rise under the impetus of strong positive price effects.

Higher market valuations for foreign direct investment also caused the value of net direct investment to rise compared with the end of 2022.

Driven by an increase in Belgian foreign investment, net other investment rose. Other flows had a limited positive influence.

Transactions

The balance of payments financial account ended the year in negative territory. Strong build-up was seen on both the assets (€63.5 billion) and liabilities (€70.0 billion) sides, mainly in the first quarter. Over 2023 as a whole, liabilities to non-residents exceeded claims on non-residents by €6.5, meaning Belgium was a net borrower from the rest of the world .

The portfolio investment balance was strongly negative (-€21.9 billion) as a result of purchases of Belgian OLOs by non-residents in the first and second quarters.

The direct investment balance turned negative for the first time since 2019 (-€8.8 billion). Both assets and liabilities were reduced due to the repayment of outstanding loans, among other factors.

On the other hand, the balance of other investment was strongly positive (€26.4 billion). Gross assets and liabilities increased owing to financial transactions in the banking sector, with a more pronounced increase on the assets side.

Communication	14 Blvd de Berlaimont	Tel. + 32 2 221 46 28	Company number: 203.201.340
National Bank of Belgium SA/NV	1000 Brussels	www.nbb.be	Brussels RLE

INTERNATIONAL INVESTMENT POSITION: AMOUNTS OUTSTANDING, TRANSACTIONS AND OTHER FLOWS

€ billion	% GDP
Net international investment
position	319.6	57.7
Direct investment	151.2	27.3
Portfolio investment	201.2	36.3
Other investment	-71.6	-12.9
Reserve assets	38.8	7.0
External financial assets	2 326.8	420.0
Direct investment	1 002.2	180.9
Portfolio investment	792.5	143.0
Other investment	493.3	89.0
Reserve assets	38.8	7.0
External financial liabilities	2 007.3	362.3
Direct investment	851.0	153.6
Portfolio investment	591.3	106.7
Other investment	565.0	102.0
Source: NBB (BoP, IIP).

Note: Other investment includes financial derivatives.

2022	2023
Amounts outstanding	Transactions	Other flows
€ billion	€ billion	€ billion	% GDP
-6.5	68.0	381.0	65.4
-8.8	33.7	176.0	30.2
-21.9	31.1	210.4	36.1
26.4	2.9	-42.4	-7.3
-2.2	0.3	37.0	6.3
63.5	73.7	2 464.1	423.0
-27.1	30.8	1 005.8	172.6
21.3	55.8	869.7	149.3
71.5	-13.2	551.7	94.7
-2.2	0.3	37.0	6.3
70.0	5.8	2 083.1	357.6
-18.3	-2.9	829.8	142.4
43.2	24.7	659.3	113.2
45.1	-16.0	594.1	102.0

Outstanding amounts

Other flows consist of price changes, exchange rate changes and other volume changes (such as reclassification to another functional category).

NET INTERNATIONAL INVESTMENT POSITION

(in % GDP, amounts outstanding))

BALANCE OF PAYMENTS FINANCIAL ACCOUNT

(in € billion, transactions over 12 months)

Source: NBB (IIP).

Note: Other investment includes financial derivatives.

Amounts expressed as a percentage of GDP were calculated as the ratio of NIIP to total nominal GDP over the last four quarters.

Last observation: Q4 2023.

Source: NBB (BoP).

Note: Net other investment includes financial derivatives. Last observation: Q4 2023.

Communication	14 Blvd de Berlaimont	Tel. + 32 2 221 46 28	Company number: 203.201.340
National Bank of Belgium SA/NV	1000 Brussels	www.nbb.be	Brussels RLE

Net international investment position: international comparison

Most euro area countries had a negative NIIP. At 62.4% of GDP in the third quarter of 2023, Belgium had the fourth-highest NIIP in the euro area.

NET INTERNATIONAL INVESTMENT POSITION IN Q3 2023

(in % of GDP, amounts outstanding)

Sources: NBB (IIP), ECB, Eurostat.

Note: The international comparison was limited to the third quarter as data for the fourth quarter for the euro area and certain member states were not yet available.

External assets and liabilities

• • Breakdown by currency

External assets and liabilities are denominated in different currencies. Significantly different currency exposures mean that exchange rate fluctuations can have a strong influence on the net international investment position.

Assets were mainly held in euros (72.8%), US dollars (19.7%) and British pounds (2.3%).

Liabilities were contracted almost entirely in euros (88.0%). The use of the US dollar (7.7%) and the British pound (1.7%) was more limited.

EXTERNAL ASSETS: AMOUNTS OUTSTANDING

EXTERNAL LIABILITIES: AMOUNTS OUTSTANDING

(in %, share of total in Q4 2023)

(in %, share of total in Q4 2023)

Source: NBB (IIP).

Source: NBB (IIP).

Communication	14 Blvd de Berlaimont	Tel. + 32 2 221 46 28	Company number: 203.201.340
National Bank of Belgium SA/NV	1000 Brussels	www.nbb.be	Brussels RLE

• • Development of the NIIP

Both assets and liabilities increased noticeably in 2023.

In the case of assets, the 5.9% increase was attributable to both transactions and price changes. Exchange rate changes (-0.8 percentage points) were fully offset by greater investment by Belgians abroad (2.7 percentage points) and price changes (2.9 percentage points).

Increasing by 3.8%, liabilities rose less than assets. Greater investment by non-residents in Belgium (3.5 percentage points) and price changes (0.7 percentage points) contributed positively, versus negative exchange rate effects (-0.3 percentage points).

EXTERNAL ASSETS: AMOUNTS OUTSTANDING

(year-on-year growth in %; contribution to growth in percentage points)

EXTERNAL LIABILITIES: AMOUNTS OUTSTANDING

(year-on-year growth in %; contribution to growth in percentage points)

Source: NBB (BoP, IIP).

Note: Other volume changes include reclassifications and data improvements. Valuation effects are the result of price and exchange rate changes.

Last observation: Q4 2023.

Source: NBB (BoP, IIP).

Note: Other volume changes include reclassifications and data improvements. Valuation effects are the result of price and exchange rate changes.

Last observation: Q4 2023.

Communication	14 Blvd de Berlaimont	Tel. + 32 2 221 46 28	Company number: 203.201.340
National Bank of Belgium SA/NV	1000 Brussels	www.nbb.be	Brussels RLE

Notes on methodology

The international investment position indicates a country's outstanding foreign financial assets and liabilities (stocks) at a given point in time. The balance of payments financial account reveals how these assets and liabilities were formed and thus provides an overview of financial transactions with foreign countries over a specified period.

Both are divided into five functional categories of assets and liabilities:

1. Direct investment: this category includes investments of 10% or more in the equity capital of companies and lending/borrowing between related companies as well as real estate investments.

2. Portfolio investment: this category includes, on the assets side, securities held by residents (shares, bonds, units of investment funds, commercial paper, etc.) that are issued by non-residents and, conversely, on the liabilities side, securities held by non-residents issued by residents.

3. Financial derivatives: these are financial products linked to the value of an underlying asset; for purposes of this press release, financial derivatives are included in the "other investment" category.

4. Other investment: this category includes everything not included in the other four categories, such as loans, deposits and accounts receivable and payable.

5. Reserve assets: these include monetary gold, claims on the IMF, bonds and foreign currencies; this category exists on the assets side only.

Communication	14 Blvd de Berlaimont	Tel. + 32 2 221 46 28	Company number: 203.201.340
National Bank of Belgium SA/NV	1000 Brussels	www.nbb.be	Brussels RLE