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19/02/2014 - Balance of payments: December 2013

Current account balance

December 2013

The current account deficit almost halved year-on-year to €215 million, mainly on account of improvements in, chiefly, the current transfers balance and, to a lesser extent, the services balance, while the trade deficit increased, and the income account balance showed a deficit, against a surplus year-on-year.

The trade deficit rose by €338 million, as a result of the higher non-oil trade deficit, which is attributable to a decline in export receipts concurrent with a rise in the import bill; by contrast, the net oil import bill fell.

The €169 million increase in the services surplus is due to higher net (mainly transport) receipts. In addition, non-residents’ tourist arrivals and corresponding spending in Greece recorded year-on-year increases of 21.7% and 15.6%, respectively. It should be noted that cruise receipts are excluded from travel spending, as they have already been included in the December 2012 data. (It should be pointed out that travel spending by non-residents in Greece includes, in addition to the Bank of Greece’s Border Survey data, also cruise data only for the January 2012-September 2013 period).

The current transfers balance showed a surplus of €602 million, up by €580 million year-on-year, mainly as a result of a €534 million inflow representing the second disbursement of the income on the Securities Markets Programme (SMP) portfolio accruing to the Eurosystem payable to Greece.

January-December 2013

The current account balance in 2013 showed a surplus of €1.2 billion, against a deficit of €4.6 billion in 2012. This development is attributable, primarily, to a significant decline in the trade deficit (down by €2.4 billion) and, secondarily, to increases in the current transfers and services surpluses (up by €3 billion and €1.7 billion, respectively). By contrast, the income account deficit grew.

In more detail, the contraction of the trade deficit is largely attributable to a considerably reduced import bill (by 4.5%) for all products, as well as a 2.3% rise in export receipts. Apart from oil product exports, which account for the bulk of this increase, the contribution of foods and beverages and non-metallic mineral products was also significant. The decline in the import bill resulted mainly from lower oil imports.

An increase in the services surplus is mainly due to higher net travel receipts and the improved “other” services balance, which offset a contraction in net transport receipts. In more detail, travel spending in Greece by non-residents grew by 14.9% year-on-year (also reflecting a 15.5% rise in non-residents’ arrivals over the same period, according to the Bank of Greece’s border survey); at the same time, travel spending by residents abroad remained almost unchanged (It should be pointed out that travel spending by non-residents in Greece includes, in addition to the Bank of Greece’s Border Survey data, also cruise data only for the January 2012-September 2013 period).

The income account deficit rose by €1.2 billion year-on-year, due to higher net interest, dividend and profit payments.

Finally, the current transfers balance showed a surplus of €4.5 billion, up by €3 billion year-on-year. This development is mainly due to higher general government net transfer receipts (mainly from the EU).

Capital transfers balance

In December 2013 the capital transfers balance showed a surplus of €35 million, compared with €498 million in December 2012 . In 2013, as a result of higher net transfers to general government, the capital transfers balance recorded a surplus of €3 billion, up by €0.7 billion year-on-year.

Finally, the overall transfers balance (current transfers plus capital transfers) showed a surplus of €7.5 billion in 2013, up by €3.8 billion over 2012.

Combined current account and capital transfers balance

Owing to the abovementioned developments, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €180 million in December 2013, against a surplus of €18 million in December 2012. In any event, this balance showed a surplus of €4.3 billion in 2013, against a deficit of €2.3 billion in 2012.

Financial account balance

In December 2013, non-residents’ direct investment in Greece showed a net inflow of €1.2 billion, compared with a net inflow of €555 million in December 2012. The most important transactions concerned: a) an inflow of €616 million from the sale of National Bank of Greece’s subsidiary, Ethniki Pangaea Real Estate Investment Company, to the Dutch company Invel Real Estate Partners, and b) an inflow of €328 million from the sale of the remaining 49% of Folli Follie’s stake in Hellenic Duty Free Shops to the Swiss group Dufry International AG. Residents’ direct investment abroad recorded an increase (outflow) of €109 million, without any remarkable transactions.

Under portfolio investment, a net outflow of €932 million was recorded (compared with a net outflow of €25.6 billion in December 2012), mainly as a result of an increase in residents’ holdings of foreign bonds and Treasury bills (outflow), and a rise in residents’ holdings of foreign financial derivatives and foreign shares (outflow).

Under “other” investment, a net inflow of €144 million was recorded (compared with a net inflow of €24.5 billion in the same month of 2012). This inflow is chiefly attributable to a €2.2 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). These developments were offset by a €1.7 billion drop (outflow) in non-residents’ deposit and repo holdings in Greece (including the TARGET account), as well as a €430 million increase (outflow) in loans extended to non-residents.

In the January-December 2013 period, non-residents’ direct investment in Greece showed a net inflow of €1.9 billion, whereas residents’ direct investment abroad showed a net inflow (disinvestment) of €469 million.

Under portfolio investment, a net outflow of €6.6 billion was recorded (compared with a net outflow of €100 billion in the same period of 2012), chiefly due to a drop in non-residents’ holdings of Greek government bonds and Treasury bills. This was partly offset by an inflow due to non-residents’ purchases of shares of Greek firms and a decline in residents’ investment in foreign bonds, Treasury bills and shares (inflow).

Under “other” investment, a net inflow of €676 million was recorded (compared with a net inflow of €101.7 billion in the same period of 2012). This is chiefly attributable to a €27.2 billion increase in the outstanding debt of the public and the private sector to non-residents (as a result of a €30.1 billion net increase in the outstanding debt of the public sector), as well as to an €18.9 billion decline in resident institutional investors’ deposit and repo holdings abroad (inflows). These developments were partly offset by a €43.8 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).

At end-December 2013, Greece’s reserve assets stood at €4.2 billion, compared with €5.5 billion at end-December 2012.

Note: Balance of payments data for January 2014 will be released on 24 March 2014.

Related link: Balance of payments: December 2013