Swiss balance of payments and international investment position: Q3 2016

In the third quarter of 2016, the current account surplus amounted to CHF 21 billion. This was CHF 2 billion less than in the year -back quarter. As a result of lower receipts from direct investment, the receipts surplus in primary income (labour and investment income) declined by CHF 4 billion to CHF 1 billion. The surplus of receipts from trade in goods increased by CHF 2 billion to CHF 17 billion, while the surplus of receipts for trade in services and the surplus of expenses for secondary income remained at the same level as in the year-back quarter (CHF 5 billion and CHF 2 billion respectively). On the assets side, the financial account recorded a net acquisition of CHF 49 billion (Q3 2015: CHF 43 billion), which was largely attributable to the other investment item as well as reserve assets.

On the liabilities side, net incurrence totalled CHF 12 billion, thus remaining unchanged from the year -back figure. However, direct and portfolio investment registered a net reduction of liabilities, while the other investment item posted a net incurrence. With the inclusion of derivatives, the financial account balance was positive at CHF 39 billion.

In the international investment position, stocks of assets increased by CHF 40 billion to CHF 4,381 billion in the third quarter of 2016. This rise was due, in particular, to the transactions reported in the financial account. Stocks of foreign liabilities were up CHF 15 billion to CHF 3,582 billion, mainly as a result of price gains from stock exchange movements in Switzerland. The net international investment position advanced by CHF 25 billion to CHF 799 billion.

Current account Receipts Receipts from total goods trade amounted to CHF 78 billion, CHF 6 billion higher than in the year-back quarter. Goods exports according to foreign trade statistics (total 1) increased by CHF 3 billion year-on-year to CHF 53 billion in the third quarter. Exports were up in the chemical and pharmaceutical industry, and in jewellery, in particular, while they receded in the watch industry. Receipts from non- monetary gold trading came to CHF 21 billion, compared to CHF 17 billion in the year-back quarter. At CHF 6 billion, net merchanting receipts remained on a par with the year -back figure. Receipts from trade in services with foreign countries in the third quarter amounted to CHF 28 billion, up CHF 1 billion over the year-back figure. An increase was registered in insurance and pension services, telecommunications, computer and information services, business services, and licence fees, whereas receipts from transport declined. As a result of lower receipts from investment abroad (particularly direct investment), primary income (labour and investment income) decreased by CHF 4 billion to CHF 32 billion. Secondary income (current transfers) advanced by CHF 1 billion to CHF 10 billion compared with the third quarter of 2015. Expenses Expenses for total goods trade amounted to CHF 62 billion, a CHF 4 billion increase over the year-back quarter. Goods imports according to foreign trade statistics (total 1) increased by CHF 2 billion to CHF 42 billion compared to the year-back level. The largest rise was recorded in chemical and pharmaceutical products, and in motor vehicles. Expenses from non-monetary gold trading came to CHF 18 billion, compared to CHF 17 billion in the third quarter of 2015. At CHF 23 billion, expenses in services imports exceeded the figure for the year-back quarter by CHF 1 billion. This was primarily attributable to higher expenses for telecommunications, computer and information services as well as business services. The other components did not change significantly from their third quarter 2015 levels. Expenses in the case of primary income (labour and investment income) remained unchanged at CHF 31 billion. With regard to secondary income (current transfers), expenses totalled CHF 12 billion, equalling the amount in the year-back quarter. Net The current account surplus amounted to CHF 21 billion, CHF 2 billion less than in the third quarter of 2015. Although the receipts surplus increased in trade in goods, it declined substantially in primary income (labour and investment income) compared to the same quarter in 2015.	Swiss balance of payments Q3 2016 Source: Snb.ch - Click to enlarge
Financial account Net acquisition of financial assets Net acquisition of financial assets amounted to CHF 49 billion (Q3 2015: CHF 43 billion). This was mainly due to the other investment item and reserve assets. The former registered a net acquisition of CHF 26 billion (Q3 2015: net reduction of CHF 22 billion), which was largely attributable to the fact that commercial banks, the SNB and companies considerably increased their claims abroad. In reserve assets, net acquisition of financial assets amounted to CHF 15 billion (Q3 2015: CHF 12 billion). Direct investment posted net acquisition of financial assets totalling CHF 9 billion (Q3 2015: CHF 50 billion). In particular, companies domiciled in Switzerland increased loans granted to subsidiaries and affiliates abroad. Net incurrence of liabilities The liabilities side of the financial account registered a net incurrence of CHF 12 billion, on a par with the year-back quarter. The other investment item posted a net incurrence of liabilities in the amount of CHF 20 billion (Q3 2015: CHF 14 billion), due to an increase in commercial banks’ liabilities abroad, primarily in interbank business. By contrast, direct investment recorded a net reduction in liabilities of CHF 6 billion (Q3 2015: net incurrence of CHF 2 billion), as a result of parent companies abroad reducing equity capital in their subsidiaries in Switzerland. Transactions in portfolio investment led to a net reduction of CHF 3 billion as investors domiciled abroad sold more Swiss-issued shares than they bought. Net The financial account balance amounted to CHF 39 billion (Q3 2015: CHF 31 billion). This 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. This positive financial account balance corresponds to the increase in the net international investment position resulting from cross-border investment. Statistical difference The statistical difference item comprises all deviations which arise from errors and omissions in statistical surveys. It is calculated as the net financial account balance minus the sum of the net current account and net capital account. In the third quarter of 2016, the statistical difference amounted to CHF 18 billion (Q3 2015: CHF 8 billion). This positive balance suggests either that current account receipts or net incurrence of liabilities have been underestimated, or, alternatively, that current account expenses or net acquisition of financial assets have been overestimated.	Switzerland Financial Account Extract from the Balance of Payments Q3 2016 Source: Snb.ch - Click to enlarge
Switzerland’s international investment position Foreign assets Stocks of foreign assets were up CHF 40 billion on the previous quarter to CHF 4,381 billion. Portfolio investment grew by CHF 23 billion to CHF 1,260 billion on the back of stock market gains on equity securities. The other investment item advanced by CHF 23 billion to CHF 812 billion, mainly due to transactions and to the increase in the SNB’s reserve assets. The latter rose by CHF 19 billion to CHF 677 billion. By contrast, stocks of direct investment declined by CHF 5 billion to CHF 1,528 billion, while stocks of derivatives dropped by CHF 19 billion to CHF 104 billion. Foreign liabilities Stocks of foreign liabilities rose CHF 15 billion to CHF 3,582 billion compared to the previous quarter. Despite net sales according to the financial account, stocks of portfolio investment increased by CHF 24 billion to CHF 1,055 billion. This was primarily attributable to higher share prices in Switzerland. The other investment item increased by CHF 19 billion to CHF 1,177 billion, due to commercial banks’ transactions with banks abroad. Stocks of direct investment receded by CHF 10 billion to CHF 1,249 billion. Derivatives declined by CHF 18 billion to CHF 101 billion. Net international investment position The net international investment position increased by CHF 25 billion compared with the last quarter to CHF 799 billion, since foreign assets (up CHF 40 billion) advanced more strongly than foreign liabilities (up CHF 15 billion).	Switzerland International Investment Position (see more posts on Switzerland International Investment Position, ) Switzerland International Investment Position - Q3 2016 Source: Snb.ch - Click to enlarge

Remarks