Press release

Communications

P.O. Box, CH-8022 Zurich Telephone +41 58 631 00 00 communications@snb.ch

Zurich, 20 September 2019

Swiss balance of payments and international investment positionQ2 2019

Overview

In the second quarter of 2019, the current account surplus amounted to CHF 21 billion, slightly lower than in the same quarter of 2018. The goods trade balance and the primary income balance (labour and investment income) declined marginally, while the services trade balance and the secondary income balance (current transfers) hardly changed.

In the financial account, reported transactions showed a net acquisition on the assets side (CHF 11 billion) and a net incurrence on the liabilities side (CHF 5 billion). The main contributor to the net acquisition on the assets side was other investment, while in the case of the net incurrence on the liabilities side it was portfolio investment.

Two opposing effects drove developments in the international investment position. On the one hand, valuation gains resulted from price increases on domestic and foreign stock exchanges; on the other, exchange rate-related valuation losses were recorded. On the assets side, revaluations largely offset each other, and stocks rose by CHF 6 billion to CHF 4,804 billion. On the liabilities side, price-related valuation gains predominated. Stocks of liabilities were up CHF 30 billion to CHF 4,008 billion. As a result, the net international investment position receded by CHF 24 billion to CHF 796 billion.

New data available on breakdown of changes in stocks in the international investment position

The SNB has expanded its range of data on Switzerland's international investment position (IIP). In addition to publishing information on the stocks in the IIP at specific times, it now also provides data on changes to the IIP broken down according to their causes. The data are

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Zurich, 20 September 2019

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now available on the SNB data portal (data.snb.ch, Table selection, International economic affairs, Switzerland's foreign economic affairs, Switzerland's international investment position).

Current account

Receipts

At CHF 83 billion, receipts from total goods trade were slightly lower compared to the year- back quarter. Whereas receipts according to the foreign trade statistics (total 1) rose by CHF 1 billion to CHF 62 billion, exports of non-monetary gold fell by CHF 2 billion to CHF 12 billion. At CHF 9 billion, receipts from merchanting remained on a par with the year-back quarter.

Receipts from foreign trade in services were the same as in the year-back quarter at CHF 31 billion. A slight increase in tourism receipts was offset by a decrease in receipts from licence fees.

At CHF 40 billion, receipts under primary income (labour and investment income) were down by CHF 4 billion on the year-back quarter. This was primarily attributable to lower earnings from direct investment abroad. Receipts under secondary income (current transfers) amounted to CHF 11 billion, a CHF 1 billion increase over the year-back quarter. This was predominantly due to higher claim payments to reinsurance companies in Switzerland for loss events they had reinsured abroad.

Expenses

Expenses for total goods trade amounted to CHF 69 billion - the same as in the year-back quarter. Expenses according to the foreign trade statistics (total 1) fell by CHF 1 billion to just under CHF 52 billion, offsetting the other components.

Expenses for total services imports, at CHF 26 billion, were at the same level as in the year- back quarter. The highest growth in expenses was recorded in business services, whereas the most pronounced decrease was in telecommunications, computer and information services.

Expenses under primary income (labour and investment income) fell by CHF 4 billion to CHF 35 billion. This was mainly due to lower earnings from direct investment in Switzerland. Expenses under secondary income (current transfers) came to CHF 13 billion, around CHF 1 billion above the level of the year-back quarter, mainly as a result of higher foreign claim payments by reinsurance companies.

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Net

The current account surplus totalled CHF 21 billion, slightly lower than in the second quarter of 2018. It was calculated as the sum of all receipts (CHF 164 billion) minus the sum of all expenses (CHF 143 billion).

Financial account

Net acquisition of financial assets

The assets side of the financial account registered a total net acquisition of CHF 11 billion (Q2 2018: net reduction of CHF 30 billion). Other investment contributed CHF 7 billion to this net acquisition (Q2 2018: net reduction of CHF 36 billion), in part because the SNB increased its foreign claims in connection with repo transactions. Direct investment saw a net acquisition of CHF 3 billion (Q2 2018: net acquisition of CHF 19 billion). Resident companies reinvested earnings in their non-resident subsidiaries, although they also withdrew equity capital, albeit to a lesser extent. Reserve assets also posted a net acquisition, of CHF 3 billion (Q2 2018: net acquisition of CHF 3 billion). Portfolio investment, by contrast, showed a net reduction of CHF 2 billion (Q2 2018: net reduction of CHF 15 billion), mainly because resident investors sold equity securities of non-resident issuers.

Net incurrence of liabilities

The liabilities side of the financial account registered a total net incurrence of CHF 5 billion (Q2 2018: net reduction of CHF 31 billion), partly as a result of portfolio investment. Nonresident investors bought equities of resident issuers amounting to CHF 9 billion (Q2 2018: net reduction of CHF 2 billion). Direct investment registered a net reduction of CHF 4 billion (Q2 2018: net incurrence of CHF 3 billion). As in previous quarters, non-resident parent companies withdrew equity capital from resident subsidiaries. This reduction was offset by an inflow of funds resulting from the reinvestment of earnings and from intragroup lending. In the case of other investment, the transactions balanced each other out (Q2 2018: net reduction of CHF 32 billion). The SNB increased its amounts due to non-residents, while commercial banks reduced their amounts due to banks and customers.

Net

The financial account showed a balance of CHF 6 billion (Q2 2018: CHF 2 billion). The balance is calculated as the sum of all net acquisitions of assets minus the sum of all net incurrences of liabilities plus the balance from derivatives transactions. The financial account balance corresponds to the change in the net investment position resulting from cross-border investment.

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Statistical difference

The statistical difference item includes all deviations which arise from errors and omissions in statistical surveys. It is calculated as the financial account balance minus the sum of the current account balance and the capital account balance.

In the second quarter of 2019, the statistical difference amounted to CHF -16 billion (Q2 2018: CHF -21 billion). This negative balance suggests either that current account receipts or net incurrence of liabilities have been overestimated or, alternatively, that current account expenses or net acquisition of financial assets have been underestimated.

International investment position

Assets

Stocks of assets were up slightly, by CHF 6 billion to CHF 4,804 billion compared with the first quarter of 2019. Revaluations due to price and exchange rate changes moved in opposite directions, largely offsetting each other. On the one hand, all components recorded valuation losses on assets in foreign currency; on the other, prices on foreign stock exchanges rose, resulting in valuation gains for portfolio investment and reserve assets. Portfolio investment recorded an increase of CHF 8 billion to CHF 1,379 billion and reserve assets rose by CHF 6 billion to CHF 811 billion. Stocks of derivatives were up CHF 3 billion to CHF 92 billion. Other investment stocks, by contrast, were unchanged at CHF 838 billion - exchange rate losses were offset by financial account transactions. Direct investment stocks declined by CHF 10 billion to CHF 1,683 billion.

Liabilities

Owing to revaluations, stocks of liabilities rose by CHF 30 billion overall to CHF 4,008 billion. Valuation gains driven by increases on the Swiss stock exchange significantly outweighed foreign exchange losses, as only a small proportion of liabilities is held in foreign currency. Portfolio investment accounted for all the valuation gains; stocks grew by CHF 34 billion to CHF 1,220 billion. Transactions also contributed to this increase, as non-resident investors purchased equities of resident issuers. However, statistical changes partly offset the rise; in previous quarters, the stocks reported by reporting institutions were too high, and this was corrected in the quarter under review.Direct investment stocks grew by CHF 1 billion to CHF 1,513 billion. Here, statistical changes offset the foreign exchange losses and transaction-related reduction. Stocks of other investment receded by CHF 4 billion to

CHF 1,182 billion, and stocks of derivatives by CHF 1 billion to CHF 92 billion.

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Net international investment position

Given that stocks of liabilities (up CHF 30 billion) showed a more pronounced increase than stocks of assets (up CHF 6 billion), the net international investment position fell by CHF 24 billion to CHF 796 billion.

Remarks

The balance of payments (current account, capital account and financial account) records transactions between residents and non-residents during a specified period. The international investment position reports the cross-border stocks of financial assets of all institutional units on a specific reference date at the end of a period. Changes in assets and liabilities in the international investment position are the result, first, of transactions recorded in the financial account. Second, stocks are affected by revaluations (due to changes in prices or exchange rates) and other changes in volume (e.g. reclassifications or other statistical changes).

In the comments on the balance of payments, period-by-period comparisons of transactions refer to the year-back quarter, since certain items are influenced by seasonal factors (e.g. tourism), especially in the current account. Seasonally adjusted data are not available. By contrast, the period-by-period comparisons in the international investment position refer to stocks at the end of the previous quarter. The focus in this case is on changes in stocks over the course of the period under review.

Comprehensive tables covering the balance of payments and the international investment position can be found on the SNB's data portal, data.snb.ch, Table selection, International economic affairs.

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SWISS BALANCE OF PAYMENTS - OVERVIEW

In CHF millions

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

Current account, net

21,721

16,827

15,449

20,553

21,273

Receipts

167,760

158,548

159,145

149,890

163,872

Expenses

146,039

141,720

143,695

129,337

142,599

Goods and services, net

19,142

17,215

19,774

23,119

18,959

Receipts

113,976

110,868

112,803

110,066

113,339

Expenses

94,834

93,653

93,029

86,947

94,380

Goods, net

14,460

11,187

16,410

16,496

14,239

Receipts

83,455

79,296

82,121

79,644

82,853

Foreign trade

78,332

74,156

75,159

73,629

77,471

Of which foreign trade total 11

59,958

54,853

60,819

60,671

61,456

Of which non-monetary gold

14,030

15,055

10,103

8,972

12,140

Supplements to foreign trade2

-3,486

-3,019

-2,858

-3,488

-3,495

Merchanting

8,609

8,159

9,820

9,503

8,877

Expenses

68,995

68,109

65,711

63,148

68,614

Foreign trade

70,436

69,049

66,558

64,564

70,016

Of which foreign trade total 11

52,399

48,107

50,586

51,634

51,658

Of which non-monetary gold

15,399

19,071

13,188

10,334

15,467

Supplements to foreign trade2

-1,440

-940

-847

-1,416

-1,402

Services, net

4,682

6,028

3,364

6,624

4,721

Receipts

30,521

31,572

30,682

30,422

30,486

Expenses

25,839

25,544

27,318

23,799

25,765

Primary income, net

4,865

1,956

-1,531

340

4,625

Receipts

43,494

36,435

34,823

28,928

39,591

Expenses

38,629

34,479

36,354

28,588

34,966

Labour income, net

-5,925

-5,899

-5,896

-5,994

-5,986

Receipts

627

627

627

627

627

Expenses

6,552

6,526

6,523

6,621

6,613

Investment income, net

10,790

7,855

4,365

6,334

10,611

Receipts

42,867

35,808

34,196

28,301

38,964

Expenses

32,077

27,953

29,831

21,967

28,353

Secondary income, net

-2,287

-2,344

-2,793

-2,906

-2,312

Receipts

10,290

11,245

11,518

10,896

10,942

Expenses

12,577

13,588

14,312

13,802

13,254

Capital account, net

1,358

4,986

-84

40

130

Receipts

1,726

6,697

194

145

214

Expenses

368

1,711

278

105

84

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Financial account (excluding derivatives), net

899

37,471

20,972

-2,340

5,719

Net acquisition of financial assets

-29,970

-17,917

8,975

-40,908

10,974

Net incurrence of liabilities

-30,869

-55,388

-11,996

-38,568

5,256

Direct investment, net

15,871

26,906

24,268

-1,173

6,864

Net acquisition of financial assets

18,855

10,709

3,443

-16,497

3,241

Net incurrence of liabilities

2,984

-16,197

-20,826

-15,324

-3,623

Portfolio investment, net

-13,427

6,741

-5,145

7,232

-10,929

Net acquisition of financial assets

-15,153

-500

-11,229

2,500

-2,277

Net incurrence of liabilities

-1,726

-7,241

-6,084

-4,732

8,653

Other investment, net

-4,174

-1,057

-941

-10,681

7,163

Net acquisition of financial assets

-36,301

-33,007

13,973

-29,193

7,389

Net incurrence of liabilities

-32,127

-31,950

14,913

-18,512

226

Reserve assets, net

2,629

4,882

2,789

2,281

2,621

Derivatives, net

908

-339

271

172

-146

Statistical difference

-21,273

15,319

5,877

-22,761

-15,831

  1. Foreign trade according to Federal Customs Administration (FCA).
  2. Additions: unchecked goods trade, small consignments, goods procured in ports. Subtractions:cross-border processing traffic, returned goods, CIF/FOB adjustment on imports.

Source: SNB

SWITZERLAND'S INTERNATIONAL INVESTMENT POSITION - OVERVIEW

In CHF millions

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

Assets

4,869,174

4,794,024

4,784,826

4,797,844

4,804,093

Direct investment

1,733,056

1,720,840

1,724,643

1,693,485

1,683,468

Portfolio investment

1,366,429

1,357,221

1,321,571

1,371,271

1,378,857

Derivatives

98,940

98,790

106,779

89,300

92,269

Other investment

875,147

833,146

855,336

838,396

838,124

Reserve assets

795,602

784,027

776,498

805,392

811,376

Liabilities

4,014,588

3,979,346

3,900,667

3,978,181

4,007,887

Direct investment

1,569,513

1,546,578

1,527,097

1,512,761

1,513,404

Portfolio investment

1,111,898

1,152,225

1,070,345

1,186,167

1,220,330

Derivatives

105,199

101,441

107,511

92,876

92,209

Other investment

1,227,978

1,179,102

1,195,715

1,186,377

1,181,943

Net international investment position

854,586

814,678

884,159

819,663

796,206

Direct investment

163,543

174,262

197,546

180,724

170,063

Portfolio investment

254,531

204,996

251,226

185,104

158,527

Derivatives

-6,258

-2,651

-732

-3,576

60

Other investment

-352,831

-345,956

-340,380

-347,981

-343,820

Reserve assets

795,602

784,027

776,498

805,392

811,376

Source: SNB

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SNB - Schweizerische Nationalbank published this content on 20 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 September 2019 10:11:07 UTC