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.

The balance of payment’s current account is summarised on a monthly basis, detailed quarterly and fully detailed annually. In the detailed annual publication, data is fully geographically distributed by counterpart country, while in the quarterly publications data is 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. D. Errors and omissions

A single transaction on the current or the capital account always results in a corresponding transaction on the financial account. Therefore, the balance of payments accounts are, in principle, balanced. However, imperfections in data source and compilation can result in an imbalance that is captured in the item “errors and omission”. 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.

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. 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 on the balance of payments specify the level of detail for data deliveries to Eurostat for both items, flows, counterparty country, and periods. The national dissemination of balance of payments 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) (BPM6) issued by the IMF in 2009.

The definition of geographical areas and groupings follows Eurostat's guidelines for the balance of payments (Balance of Payments Vademecum), based on international cooperation on statistics and metadata SDMX, the X, the 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. An overview of which geographical areas are included in other countries is available her. For economic zones, i.e., groupings of countries that do not depend on a country's physical location, 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

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 person: A resident person is a person who is permanently resident in Denmark or a person who is 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.

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.

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.

Merchanting: An activity where a company resident in Denmark buys goods from a foreign resident and sells them to another foreign resident without the goods coming to Denmark. In the balance of payments, the profit from merchanting activities (i.e., the value of the good sold minus the value of the goods acquired) is included as net export of goods under merchanting, with the country where the goods end up.

FOB and CIF value: The value of imports in the balance of payments is calculated as the value at the sender’s borders, the so-called Free on Board (FOB) value, whereas in the International trade in goods statistics (ITGS) is calculated as the value at the Danish border, the so-called Cost, Insurance Freight (CIB) valued. The difference between the actual paid price (invoice value) and the value at the Danish border (FOB) is considered freight services and is allocated to the transport services and insurance services for both import and exports.

FISIM: The actual interest include both an income element and a service contribution, the so-called Financial Intermediation Services Indirectly Measured (FISIM). The identification of FISIM as the financial service implicitly included in the actual interest requires corresponding adjustment to interest, to be recorded in the primary income account.

Ownership principle vs border crossing: 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, which follows the principle of border crossing.

Counterpart country in direct investment: The distribution of property income from direct investments is affected by the fact that information is collected about the first counterpart 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).

Statistical unit

Economic transactions between Danish residents and nonresidents.

Statistical population

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

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

Monthly

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.

As the national statistical authority of Denmark, the Act on Statistics Denmark also applies.

Cost and burden

Data source 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 statistics being sources for the balance of payments statistics.

Comment

Additional information can be found in the subject page Balance of payments and international trade.