Swedish net exports are largely made up of goods that have been produced abroad
The authors of a new staff memo show that Sweden's current account surplus is no longer due to the traditional trade in goods. Instead, it is what is known as merchanting, the trade margin that arises between the purchase price and the sale price when Swedish companies buy and resell goods abroad, without them crossing the Swedish border, that explains almost all of the contribution made by the trade in goods to the surplus.
Merchanting is recorded in the statistics as part of goods exports, but it differs from what we normally associate with the export and import of goods, for example in that the goods are not produced in Sweden and the overseas transactions often occur within multinational corporations. The "merchanting" phenomenon is therefore of significance for how we should interpret the Swedish current account surplus and ultimately for the connection between the current account and other economic indicators, such as GDP and productivity.
In Sweden, merchanting has become increasingly important as multinational corporations have moved their production abroad but retained their headquarters, research and development and other key functions and assets in Sweden.
Staff Memos are a new form of publication from the Riksbank and a complement to other publications, such as Economic Commentaries and Riksbank Studies. In Staff Memos, Riksbank employees can publish longer analyses in their own names. The opinions expressed in Staff Memos are those of the authors and are not necessarily shared by the Riksbank.