January 9, 2023
International investment position and balance of payments financial account (third quarter of 2022)
– Net international investment position rises to €318 billion or 59% of GDP
– For the fourth quarter in a row, the Belgian economy posts an external financing deficit
Outstanding amounts
The net international investment position (NIIP) rose to €318.1 billion in the third quarter of 2022 compared with €308.5 billion in the previous quarter. This increase is entirely due to exchange rate effects. The weaker euro exchange rate generated a positive effect on the NIIP since there was more investment in foreign exchange on the assets side than on the liabilities side. Negative price effects and an external financing deficit are slowing down the impact of the positive exchange rate effects.
Despite the large negative price effects, net portfolio investment remains the most important component of the positive NIIP. Exchange rate effects and purchases on the assets side have notably led to a rise in net portfolio investment.
Likewise, net direct investment benefited from the aforementioned favourable exchange rate effects and rose to €151.6 billion. Total direct investment holdings by Belgians abroad overshot the €1 billion mark this quarter.
Net other investment fell further to €-74.0 billion; its lowest level since the end of 2008. Underlying gross liabilities arising from other investment nevertheless rose even further to new record highs, partly because of the economic sanctions against Russia. With the halting of payments to the Russian central bank, term accounts that had reached maturity, coupon and dividend payments remain outstanding as interbank debt.
Transactions
The accumulation of foreign assets (€25.9 billion) and liabilities (€31.0 billion) was more dynamic than in the previous quarter. The balance of payments (BoP) financial account balance came to €-5.1 billion in the third quarter of 2022. This is the fourth consecutive negative balance after an eighteen-month period during which Belgium provided lending to the rest of the world. The balance of direct investment transactions was negative (€-1.1 billion) owing to higher foreign investment in Belgian corporations. The balance of portfolio investment was positive (€6.3 billion), largely as a result of purchases of foreign debt securities. This is in stark contrast to a sharply negative balance from other investment (€-10.2 billion), as a consequence of the steeply rising debt held by the central bank and commercial banks.
Source: National Bank of Belgium
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