The current account shows the sum of international trade in goods (trade balance) and services (services balance). A positive balance shows that the value of exports is higher than that of imports. For Luxembourg, this balance will increase by 17% in 2022 to €3.879bn.
Although the balance of goods continues to show a surplus at the end of the year--it reached €133m this year-- it nevertheless shows a clear drop of €775m. This surplus is due to the good performance of ‘international trade’--purchases and sales of goods without passing through Luxembourg--which shows a level of €3.452bn. This was enough to absorb the country’s structural deficit in general merchandise, which reached €3.320bn.
Luxembourg’s exports of goods rose slightly in 2022 (+1% to €24.073bn), but imports rose even more (+3% to €27.393bn).
The detailed balance of payments of Luxembourg during 2022. BCL / Statec
In accordance with tradition, it is the exports of services that carry the current account. However, the balance of international trade in services fell by 9% in 2022, from €24.181bn to €22.064bn.
“Trade in non-financial services increased for exports (2.5%) and imports (3.5%). International trade in financial services, on the other hand, showed a slight decrease of 0.5% for exports and an increase of 3% for imports. This evolution is mainly explained by the significant depreciation of assets managed by investment funds during the period under review (-14%),” said the BCL and Statec.
The capital account, which tracks purchases and sales of non-financial assets such as patents and copyrights, fell sharply and saw its balance divided by more than two, to €374m.
Together, the current account and the capital account show a surplus of €4.253bn.
Luxembourg is a net lender to the rest of the world
The financial account--which represents the sum of financial flows between a country and the rest of the world--shows a positive balance of €4.253bn. This shows that Luxembourg is a net lender to the rest of the world.
The different items that make up this account evolve in very different ways.
Direct investment flows continued to be characterised by significant disinvestments in both assets (-€374mn) and liabilities (-€411mn). “These divestments concerned a few soparfis, which continued to restructure, close down or relocate their activities,” explained the BCL and Statec.
As regards portfolio investments, the large deficit of €94.130m is attributable to the sharp fall in the markets in 2022, noted the BCL and Statec.
This story was first published in French on . It has been translated and edited for Delano.