Statistical presentation

Data description

The balance of payments is a statement of the value of economic transactions conducted within a given period between Danish residents and foreign residents. Until September 2000 the account also covered the Faroe Islands and Greenland, but since then it has only covered Denmark. The balance of payments current account is summarized on a monthly basis, detailed quarterly, and fully detailed annually. In the detailed annual publication, data is fully geographically distributed by counterpart country, while quarterly publications are only distributed by continents and selected countries. The balance of payments can be divided into three main accounts plus a special item called 'errors and omissions': A. The current account includes transactions (income and expenses) that directly affect disposable income and thus the consumption of goods and services. B. The capital account includes some special one-off transactions. C. The financial account relates to transactions that change financial assets and liabilities with foreign countries. A single transaction on the current account will always result in a corresponding transaction on the financial account. Errors and omissions are calculated residually, reflecting the difference between the total net transactions on the current account and the capital account versus the net transactions on the financial account, thereby reflecting errors and omissions in one of the three main accounts. Under the current account (A), the main items are: Goods, Services, Wages, and Other income, and Current transfers. These items are further subdivided into the most detailed tables. In addition to the items, data is subdivided by income, expenses, and net income, by counterpart country and period. On the capital account (B), various one-off incomes and expenses are recorded. One main group is the disposal and acquisition of non-produced and non-financial assets (e.g., trademarks). Another main group is capital transfers, such as grants for investments in connection with development aid. The current account is the sub-balance that often attracts the most attention – and in everyday language, the term surplus or deficit on the balance of payments is synonymous with surplus or deficit on the current account of the balance of payments. Other interesting key figures in the current account are the total import and export of goods and services. The financial account (C) is compiled by Danmarks Nationalbank and is further described on Danmarks Nationalbank’s website.

Classification system

EU regulations for the balance of payments specify the level of detail for deliveries to Eurostat for both items, flows, counterparty country, and periods, and the national statement follows this level of detail with few exceptions. The groupings of items in the balance of payments are based on the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) issued by the IMF, most recently in 2009. The national statement of the subcomponent “transfers” deviates from international recommendations as there is no distinction between the private and public sectors. The definition of geographical areas and groupings follows Eurostat's guidelines for the balance of payments (Balance of Payments Vademecum), based on international cooperation for statistics and metadata SDMX Data structure definitions for Balance of Payments and Foreign Direct Investment. The nomenclature follows the ISO 3166-1 alpha-2 standard, but some geographical areas are included in other countries. See an overview of which geographical areas are included in other countries. For economic zones, i.e., groupings of countries that do not depend on a country's physical location, it should be noted that the balance of payments is calculated using a so-called "fixed composition" concept, which means that a given grouping includes the same countries for the entire statistical period, regardless of whether a given country was a member of the group during the period in question. In the balance of payments, data is compiled for the following economic zones: EU and non-EU, Eurozone and non-Eurozone, OECD, and International organizations. See an overview of economic zones and international organisations.

Sector coverage

The statistics are compiled for the entire economy as a whole.

Statistical concepts and definitions

Geographical Distribution: The change of ownership, not physical presence, is crucial for determining the counterparty country in the balance of payments. Therefore, the geography for service trade does not show where the service is physically delivered but rather the country where the counterparty is resident. For example, a Danish lawyer may assist a British client in a case in Germany. The service (legal assistance) takes place in Germany, but the trade in services is between Denmark and the United Kingdom. In the balance of payments, the principle of change of ownership also applies to trade in goods, in contrast to the International Trade in Goods Statistics (ITGS) that follows the principle of border crossing. For investment income, the geographical distribution of interest and dividends from portfolio investments is affected by the fact that securities are largely deposited in Euroclear and Clearstream, which are domiciled in Belgium and Luxembourg, respectively. This means that these two countries are overestimated as holding countries. The distribution of property income from direct investments is affected by the fact that information is collected about the first counterparty country. As direct investments often occur via holding companies, countries that are home to holding companies are overrepresented compared to companies' perceptions of where they actually invest (the ultimate investment country).

Merchanting: An activity where an intermediary resident in Denmark buys goods from a foreign resident and sells them to a foreign resident without the goods coming to Denmark. In the balance of payments, the profit from merchanting activities (i.e., the selling price minus the purchase price) is included as an export of goods to the country where the goods end up.

Residence: Residence is a term for where in the world a given person or business is domiciled in a statistical sense. It has nothing to do with citizenship or ownership of the business but solely to determine in which country's statistics a given entity should be included.

Resident business: A resident business is a business that has an economic interest center (conducts economic activities) in Denmark for a long period (more than one year). This means that branches or subsidiaries of foreign companies are considered resident businesses in Denmark. For companies conducting construction and civil engineering activities, residence is solely defined by whether the companies have established themselves in the host country. If they have not set up a company in the country where they operate, they are not considered residents in the country, even if the economic activity lasts more than a year.

Resident person: A resident person is a person who is permanently resident in Denmark or a person who has been or intends to be resident in Denmark for more than one year. Students and people undergoing medical treatment remain residents of their home country, even if they stay in Denmark for more than a year in connection with their studies or treatment.

Statistical unit

Economic transactions between a Danish and a foreign resident

Statistical population

The population consists of all Danish residents who have economic transactions with foreign residents.

Reference area

Denmark, excluding the Faroe Islands and Greenland.

Time coverage

Within the current manual BPM6, statistics are compiled from 2005 onwards.

Base period

Not relevant for these statistics.

Unit of measure

The statistics are compiled in millions of Danish kroner.

Reference period

The balance of payments is compiled monthly, quarterly, and annually, covering the transactions conducted within this period.

Frequency of dissemination

Calendar month.

Legal acts and other agreements

The balance of payments statistics are prepared in accordance with Regulation (EC) No 184/2005 of the European Parliament and of the Council of 12 January 2005 on Community statistics concerning balance of payments, international trade in services, and foreign direct investment, with associated commission regulations.

Cost and burden

Source data largely comes from other statistics, so the reporting burden associated with producing the balance of payments current account is included in the reporting burden of the source statistics.

Comment

Additional information can be found in the Balance of payments and the international investment position.