According to a Bank of Estonia (Eesti Pank) flash estimate, Estonia's current balance of payments account is at a €665 million deficit; the extraordinary deficit is mainly linked to a software company created in Estonia recently, which is a subsidiary of German automaker Volkswagen.
"Foreign investment in software development for car production increased imports of computer services in December and through that increased the current account deficit," the Bank of Estonia wrote on Monday.
The central bank's flash estimate puts Estonia's balance of payments account in December at negative €665 million, a change from €23 million in December of 2019. The cumulative account for 2020 stands at negative €238 million, it was €554 million for 2019.
Exports of goods increased by 23 percent in December, supplemented by a 12 percent increase in imports as well, leaving the goods account in deficit by €71 million. The growth in trade in December was affected most by increased exports and imports of electrical equipment, according to the Bank of Estonia.
Exports of services in December came down 18 percent from what it was a year earlier. Travel and transport services remain in the dark for both exports and imports, but a large-scale amount of computer services imports brought a significant increase in imports of services and drove the services balance into deficit by €811 million.
A foreign investment into car production software contributed most to a growth in direct investment liabilities.
ERR News wrote in December that German automaker Volkswagen had founded a software company called Car.Software Estonia AS in Estonia. According to the data from the Tax Board, the six-employee company had a turnover of nearly €240 million over the third quarter, likely a result of asset movement within the VW Group, which Car.Software Estonia is a subsidiary of, ETV's "Aktuaalne kaamera" reported at the time.
According to Statistics Estonia (Statistikaamet), the capacity of asset movement is expected to grow even more, perhaps even to a point where it can affect state-level accounting.
Volkswagen Group is planning to invest billions into its subsidiaries is the near future with parts of it coming to Estonia. Car.Software Estonia, founded in spring, had a turnover of more than €237 million in the third quarter of 2020.
Editor: Kristjan Kallaste