Statec, Luxembourg's national statistical office, together with the Banque Centrale du Luxembourg (BCL), have announced that the public finances have shown a remarkable turnaround over the past 12 months.
From 2017 Q1 when a nett deficit was recorded (-€495 million), the 2018 Q1 preliminary figures show a surplus of €607 million. The trade deficit (general merchandise) increased by €171 million, reaching €1.9 billion during the first quarter of 2018.
An increase in imports of energy products is largely responsible for this development and more than compensated for the lack of imports in the first quarter of 2018. In terms of net international merchandise exports (purchases and sales of goods without these passing through Luxembourg), the significant increase in the first quarter of 2018 can be explained by the reclassification of a part of the purchases in trading in non-financial services imports.
This reclassification also affects previous periods (including the first quarter of 2017), but these will only be revised in September 2018. The balance of international trade in services, and in particular that of non-financial services, decreased respectively by €164 million and €290 million (in relation to the reclassification mentioned above). Exports and imports of financial services posted increases of more than 5%, due in part to favourable developments in assets managed by investment funds.
In the financial account, direct investment flows were dominated by divestment operations for both assets (-€72 billion) and liabilities (-€40 billion). These operations concerned a small number of SOPARFIs which ceased their activities. Regarding portfolio investment, non-resident investments in Luxembourg equities (largely UCI units) remained almost stable, reaching €84 billion in the first quarter of 2018, compared to €86 billion in the first quarter of 2017. On the other hand, long-term debt securities had net sales of € 4 billion in the first quarter of 2017, compared to net purchases of €15 billion in the same quarter of 2017.
In Net debt securities issued by Luxembourg thus amounted to €62 billion in the first quarter of 2018, compared to €107 billion in the same quarter of 2017. In the case of foreign securities, residents increased their investments, which totaled €95 billion in the first quarter of 2018, of which €44 billion in debt securities and €51 billion in equity securities. Portfolio investment flows resulted in net outflows of € 3 billion in the first quarter of 2018, offsetting net inflows in direct investment flows entirely.
