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The tables in this release are available in an XLS spreadsheet and the entire release is available in PDF format.
Also available: a brief summary of highlights.
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BEA 03-26
Elena L. Nguyen: (202) 606-9555
Christopher Bach: (202) 606-9545
U.S. Net International Investment Position at Yearend 2002
At yearend 2002, the value of foreign investments in the United States exceeded the value of
U.S. investments abroad by $2,387.2 billion (preliminary) with direct investment valued at current
cost (Table 1). At yearend 2001, foreign investments in the United States exceeded U.S. investments
abroad by $1,979.9 billion (revised).
The $407.3 billion increase in the negative net investment position from yearend 2001 to yearend
2002 was mainly due to large net foreign purchases of U.S. securities (mostly of corporate bonds and
Treasury securities), a shift by U.S. investors to net sellers of foreign securities, and large stock
market price declines that lowered the value of U.S.-owned assets abroad more than foreign-owned
assets in the United States. Partly offsetting these negative effects, appreciation of most foreign
currencies against the U.S. dollar raised the dollar value of U.S.-owned assets abroad, especially of
U.S.-held foreign stocks and U.S. direct investment.
With direct investment valued at the current stock market value of owner's equity, the negative
net investment position was $2,605.2 billion at yearend 2002, compared with $2,314.3 billion
(revised) at yearend 2001. The $290.9 billion increase on this basis resulted from the same factors as
above. Other highlights include:
In regard to transactions, foreign acquisitions of assets in the United States in 2002 were $707.0
billion, down from $765.5 billion in 2001 and down from a record $1,026.1 billion in 2000.
Foreign direct investment in the United States slowed substantially to the lowest level since
1992, as a result of a further drop off in foreign acquisitions of U.S. companies and reductions in
debt owed by affiliates to their foreign parents. Net foreign purchases of U.S. securities other
than U.S. Treasury securities also slowed; net purchases of U.S. stocks dropped to the lowest
level since 1998, but net purchases of U.S. bonds were the third highest on record. Net foreign
purchases of U.S. Treasuries rebounded after three years of net sales. Inflows reported by U.S.
banks slowed but remained relatively strong, and inflows reported by U.S. nonbanks increased
somewhat.
U.S. acquisitions of assets abroad in 2002 were $179.0 billion, down from $349.9 billion in 2001
and down from a record $569.8 billion in 2000. U.S. investors shifted to net sellers of foreign
securities for the first time, as a result of substantially reduced net purchases of foreign stocks
and stepped up net sales of foreign bonds. U.S. banks' claims on foreigners decelerated to the
smallest increase since 1994. U.S. nonbanks' claims on foreigners rebounded somewhat. U.S.
direct investment abroad accelerated.
Price depreciation of U.S. stocks reduced the value of foreign holdings of U.S. stocks and
substantially reduced the value of owners' equity of foreign direct investment in the United
States on a market value basis. Price depreciation of foreign stocks also diminished the value of
U.S. holdings of foreign stocks and substantially reduced the value of owners' equity of U.S.
direct investment abroad on a market value basis.
Appreciation of most foreign currencies against the U.S. dollar from yearend 2001 to yearend
2002 raised the dollar value of all foreign-currency denominated assets and liabilities, especially
the value of U.S.-held foreign stocks and U.S. direct investment abroad.
_________________________________________________________________________________
Valuation Methods for Direct Investment
The current-cost method values the U.S. and foreign parents' share of their affiliates' investment in
plant and equipment using the current cost of capital equipment, in land using general price indexes,
and in inventories using estimates of their replacement cost.
The market-value method values the owners' equity component of the direct investment position
using indexes of stock market prices.
The historical-cost method values all assets and liabilities at their book value. Country and industry
detail can be shown only under this method. Data on this basis are not presented in this release.
_________________________________________________________________________________
U.S.-owned assets abroad increased $1.8 billion to $6,189.2 billion with U.S. direct investment
valued at current cost, and they decreased $417.7 billion to $6,473.6 billion with U.S. direct
investment valued at market value.
Claims on foreigners reported by U.S. banks increased $31.9 billion to $1,455.1 billion,
reflecting a sharp slowdown in lending to foreigners amid weak economic and financial conditions
abroad and a further reduction in merger and acquisition activity.
U.S. holdings of foreign securities decreased $267.8 billion to $1,847.0 billion. Holdings of
foreign stocks decreased sharply as a result of large price depreciation that more than offset exchange
rate appreciation and small net U.S. purchases. Holdings of foreign bonds were almost unchanged as
a result of price appreciation and exchange rate appreciation that were more than offset by net U.S.
sales.
U.S. direct investment abroad at current cost increased $153.8 billion to $1,751.9 billion; at
market value, it decreased $265.7 billion to $2,036.2 billion. In 2002, net financial outflows
accelerated to $137.8 billion, but remained well below record outflows of $224.9 billion in 1999. At
current cost, financial outflows and exchange rate appreciation more than accounted for the increase
in the position. At market value, financial outflows and exchange rate appreciation were more than
offset by large declines in U.S. owners' equity, as foreign stock market prices fell sharply in 2002.
Claims on unaffiliated foreigners reported by U.S. nonbanking concerns increased $55.2 billion
to $891.0 billion, reflecting strong U.S. deposits in Western Europe and a pickup in U.S. deposits at
the Caribbean banking centers. Exchange rate appreciation also increased the value of claims.
U.S. official reserve assets increased $28.6 billion to $158.6 billion, as a result of strong price
appreciation in the market value of the U.S. gold stock and of exchange rate appreciation.
Foreign-owned assets in the United States increased $409.1 billion to $8,576.4 billion with
foreign direct investment valued at current cost, and they decreased $126.8 billion to $9,078.7 billion
with foreign direct investment valued at market value.
U.S. liabilities to private foreigners and international financial institutions reported by U.S.
banks increased $101.0 billion, to $1,407.4 billion. Although inflows were down from last year,
U.S. banks continued to receive sizable amounts of funds from securities brokers and from parents
and branches overseas.
Foreign holdings of U.S. securities other than U.S. Treasury securities, excluding official
holdings, increased $5.4 billion to $2,861.1 billion. Holdings of U.S. bonds increased as a result of
relatively strong net foreign purchases, price appreciation, and exchange rate appreciation. Holdings
of U.S. stocks decreased substantially, as moderate net foreign purchases were more than offset by
sharp price depreciation.
Holdings of U.S. Treasury securities by private foreigners and international financial institutions
increased $114.6 billion to $503.6 billion, reflecting a sizable shift in foreign transactions to net
purchases of $96.2 billion after three years of net sales. Sizable price appreciation at a time when
interest rates were falling to historical lows also increased the value of foreign holdings.
Foreign direct investment in the United States valued at current cost decreased $9.9 billion to
$1,504.4 billion; at market value, it decreased $545.8 billion to $2,006.7 billion. In 2002, net
financial inflows decreased sharply to $39.6 billion, the lowest level since 1992. At current cost, net
financial inflows were more than offset by negative valuation adjustments resulting from price
depreciation, capital losses of affiliates, and other valuation changes. At market value, net financial
inflows were more than offset by substantial price depreciation in owners' equity resulting from the
decline in U.S. stock market prices.
Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $71.1
billion to $870.3 billion, reflecting U.S. corporate borrowing, mostly from Western Europe and the
Caribbean.
U.S. currency held by foreigners increased $21.5 billion to $297.1 billion. The pace of
shipments slowed a little, but the increase remained relatively strong as a result of economic
problems in several areas of the world.
Foreign official assets in the United States increased $105.3 billion to $1,132.5 billion, the
largest increase since 1996. Net foreign official purchases of U.S. Treasury securities increased
sharply, and were augmented by price appreciation.
* * *
Revisions
The previously published estimate of the net international investment position in 2001 at current
cost was -$1,948.1 billion, and at market value was -$2,309.1 billion.
Revisions this year include the incorporation of results from the U.S. Treasury Department's
Benchmark Survey of U.S. Portfolio Investment Abroad as of December 2001 and results from
BEA's Benchmark Survey of U.S. Direct Investment Abroad for 1999. Results from the Benchmark
Survey of U.S. Portfolio Investment Abroad indicate an overstatement in the previously published
estimates of U.S. holdings of foreign bonds. Consequently, U.S. holdings of foreign bonds for 1998-
2001 are revised down. The survey results also indicate that U.S. holdings of foreign stocks are
overstated for 1998 and 1999, but are understated for 2000 and 2001. Consequently, 1998 and 1999
are revised down, and 2000 and 2001 are revised up. For the entire period of 1998-2001, revisions to
estimates of U.S. holdings of foreign securities have little effect on the size of the U.S. net
international investment position. BEA's Benchmark Survey of U.S. Direct Investment Abroad for
1999 indicates a small understatement in direct investment abroad in 1999. The direct investment
abroad estimates also incorporate updated data from annual surveys for 2000-2001.
In addition to the above improvements, all estimates are revised as a result of newly available or
revised quarterly and annual survey results and other data. Revisions attributable to updated source
data are for 1998-2001.
A more detailed discussion of the U.S. net international investment position in 2002 and the
revised historical data will appear in the July issue of the Survey of Current Business. That issue
will also contain an article about historical-cost direct investment positions, with detail by country
and industry, and revised direct investment historical data. Historical-cost data that previously
appeared in this release will be posted on BEA's Web site at <www.bea.gov>.
* * *
BEA's major national, regional, international, and industry estimates, the Survey of Current
Business, and BEA news releases are available on BEA's web site:
<www.bea.gov>
Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly
journal. Subscriptions and single copies of the printed Survey are for sale by the Superintendent of
Documents, U.S. Government Printing Office. Internet: <bookstore.gpo.gov>:
phone: (202) 512-1800; fax: (202) 512-2250; mail: Stop SSOP, Washington, DC 20402-0001.
Table 1.--International Investment Position of the United States at Yearend, 2001 and 2002
[Millions of dollars]
Changes in position in 2002 (decrease (-), increase (+))
Attributable to:
Valuation adjustments
Line Type of investment
Position, Position,
2001 /r/ Exchange 2002 /p/
Financial Price rate Other
flows changes changes /1/ changes /2/ Total
(a) (b) (c) (d) (a+b+c+d)
Net international investment position of the United States:
1 With direct investment positions at current cost (line 3 less line 16)...........-1,979,906 -527,998 -83,284 147,129 56,848 -407,305 -2,387,211
2 With direct investment positions at market value (line 4 less line 17)...........-2,314,271 -527,998 -42,105 230,053 49,166 -290,884 -2,605,155
U.S.-owned assets abroad:
3 With direct investment positions at current cost (lines 5+6+7)................. 6,187,410 178,985 -365,107 182,335 5,568 1,781 6,189,191
4 With direct investment positions at market value (lines 5+6+8)................. 6,891,251 178,985 -847,812 264,680 -13,542 -417,689 6,473,562
5 U.S. official reserve assets..................................................... 129,961 3,681 18,492 6,482 -14 28,641 158,602
6 U.S. Government assets, other than official reserve assets....................... 85,654 32 .... .... .... 32 85,686
U.S. private assets:
7 With direct investment at current cost (lines 9+11+14+15).................... 5,971,795 175,272 -383,599 175,853 5,582 -26,892 5,944,903
8 With direct investment at market value (lines 10+11+14+15)................... 6,675,636 175,272 -866,304 258,198 -13,528 -446,362 6,229,274
Direct investment abroad:
9 At current cost.............................................................. 1,598,072 137,836 -5,215 25,577 -4,418 153,780 1,751,852
10 At market value.............................................................. 2,301,913 137,836 -487,920 107,922 -23,528 -265,690 2,036,223
11 Foreign securities............................................................. 2,114,734 -15,801 -378,384 126,427 .... -267,758 1,846,976
12 Bonds........................................................................ 502,061 -33,478 21,274 11,927 .... -277 501,784
13 Corporate stocks............................................................. 1,612,673 17,677 -399,658 114,500 .... -267,481 1,345,192
14 U.S. claims on unaffiliated foreigners reported by U.S.
nonbanking concerns.......................................................... 835,780 31,880 .... 13,301 10,000 55,181 890,961
15 U.S. claims reported by U.S. banks, not included elsewhere..................... 1,423,209 21,357 .... 10,548 .... 31,905 1,455,114
Foreign-owned assets in the United States:
16 With direct investment at current cost (lines 18+19)........................... 8,167,316 706,983 -281,823 35,206 -51,280 409,086 8,576,402
17 With direct investment at market value (lines 18+20)........................... 9,205,522 706,983 -805,707 34,627 -62,708 -126,805 9,078,717
18 Foreign official assets in the United States..................................... 1,027,194 94,860 10,476 .... .... 105,336 1,132,530
Other foreign assets:
19 With direct investment at current cost (lines 21+23+24+27+28+29)............. 7,140,122 612,123 -292,299 35,206 -51,280 303,750 7,443,872
20 With direct investment at market value (lines 22+23+24+27+28+29)............. 8,178,328 612,123 -816,183 34,627 -62,708 -232,141 7,946,187
Direct investment in the United States:
21 At current cost.............................................................. 1,514,374 39,633 -6,060 579 -44,098 -9,946 1,504,428
22 At market value.............................................................. 2,552,580 39,633 -529,944 .... -55,526 -545,837 2,006,743
23 U.S. Treasury securities....................................................... 389,000 96,217 18,413 .... .... 114,630 503,630
24 U.S. securities other than U.S. Treasury securities............................ 2,855,705 291,492 -304,652 18,570 .... 5,410 2,861,115
25 Corporate and other bonds.................................................... 1,391,616 236,309 43,801 18,570 .... 298,680 1,690,296
26 Corporate stocks............................................................. 1,464,089 55,183 -348,453 .... .... -293,270 1,170,819
27 U.S. currency.................................................................. 275,569 21,513 .... .... .... 21,513 297,082
28 U.S. liabilities to unaffiliated foreigners reported by U.S.
nonbanking concerns.......................................................... 799,120 72,142 .... 6,179 -7,182 71,139 870,259
29 U.S. liabilities reported by U.S. banks, not included elsewhere................ 1,306,354 91,126 .... 9,878 .... 101,004 1,407,358
p Preliminary.
r Revised.
1. Represents gains or losses on foreign-currency-denominated assets due to their revaluation at current exchange rates.
2. Includes changes in coverage, capital gains and losses of direct investment affiliates, and other statistical adjustments to the value of assets.
Source: Bureau of Economic Analysis
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