Revision to balance of payments data for 2009 and 2010
Owing to the adjustment of the cross-border goods movement statistics for margin payments due to non-residents, i.e. “branding”, the national external trade statistics on goods and services and the current account for 2009 and 2010 have undergone significant changes. As a result, the current account deficit to GDP ratio has increased by around 1.7 percentage points to approximately 3.2% for the whole of 2009 and by around 1.2 percentage points to approximately 3.8% for the whole of 2010. The Czech National Bank announced the anticipated adjustments in a clear and transparent manner in its Inflation Report IV/2010 published on 12 November 2010 (p. 57).
Summary of the revision to current account data in 2009-2010 (in CZK billions):
| Current account (in CZK billions) |
Interim amount | New amount | Difference (between new and interim amount) |
Of which difference for goods and services compared to unadjusted data |
|---|---|---|---|---|
| 2009 | -37.0 | -114.8 | -77.8 | -61.1 |
| 2010 | -92.9 | -139.2 | -46.3 | -45.6 |
In line with the start of publication of national external trade statistics as announced in advance at CZSO and CNB seminars in October and November 2010 and in March 2011, the CNB is releasing its national presentation of the annual balance of payments data for 2009 and 2010 in the goods and services categories. The crux of the change is the exclusion of branding, i.e. margin payments to non-residents registered in the Czech Republic solely for VAT payment, from the cross-border goods and services trade statistics. In addition, the method for calculating direct trade costs has been adjusted and a new procedure for calculating the balance of services has been implemented. This is reflected in lower turnovers and a higher surplus in the balance of services. For more details on the data release change methodology see the CZSO website: http://www.czso.cz/csu/tz.nsf/i/zahranicni_obchod_v_narodnim_pojeti20110308.
With regard to the balance of payments, the growth in the branding corrective item on imports of services had seemed unsustainable and had resulted in an unnatural rise in the goods surplus and a concurrent, equally artificial, widening of the services deficit, especially in 2009 and 2010. This trend in the balance of services had been communicated in the CNB’s press releases and presentations to the public when balance of payments results were presented. Branding as a phenomenon of economic globalisation has been identified in various EU countries (e.g. Belgium, the Netherlands, Hungary and Slovenia). The adjustment of cross-border goods movement statistics for margin payments due to non-residents and the transition to national foreign trade in goods and services is a transparent solution.
As regards national foreign trade, the trade surpluses for 2009 and 2010 are down by around CZK 99.4 billion and CZK 148.0 billion respectively compared to the data presented previously. The change is larger in scale than that corresponding to the originally stated amount of the branding corrective item. There is also a major change in the structure of the balance of goods and services in favour of a services surplus (exclusion of the branding item, recalculation of direct trade costs and calculation of other services) and a decline in the goods surplus. Furthermore, after the inclusion of the results of the annual survey of foreign-owned businesses the income deficit under dividend payments and reinvested earnings is higher in 2009 than originally presented (by CZK 20.8 billion). After the inclusion of the national trade balance data, the negative net errors and omissions and valuation changes in the balance of payments decreased in both years.
The CNB will continue to release national balance of payments data only. The national data on foreign goods trade and the balance of payments for 2005–2008 will be released in September 2011.
Communication Dpt. CNB