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19/08/2016 - Balance of Payments: June 2016

Balance of Payments: June 2016


Current account

In June 2016, the current account showed a surplus of €1.0 billion, up by €496 million year-on-year. This development was mainly due to improved balances of the primary and the secondary income accounts. The deficit of the balance of goods decreased, while the services surplus declined.

The goods deficit decreased by €63 million year-on-year due to the fall in the oil deficit and in the deficit of the ships' balance, while the deficit in the balance of goods excluding oil and ships increased, as the relevant exports declined more than imports. It should be noted that, although total exports of goods declined by 5.4% at current prices, at constant prices they rose by 4.3%.
 
The surplus of the services balance narrowed by €141 million, as a result of lower net receipts from sea transport and, secondarily, from travel services. More specifically, sea transport receipts stood at €531 million, down from €950 million in June 2015, while travel receipts declined by 5.4% and arrivals by 2%. Finally, the other services balance improved, largely reflecting developments in air transport services.

In June 2016, the primary and the secondary income accounts showed surpluses of €146 and €112 million respectively, against deficits in June 2015, having improved by €368 and €207 million respectively. The improvement in the primary income account was mainly due to the other primary income category, which mostly includes taxes and subsidies on products. The amelioration in the secondary income account was mainly due to the improved general government balance.

In the first half of 2016, the current account balance improved by €1.4 billion year-on-year and showed a deficit of €2.5 billion. This development is attributable to the improvement in the primary and the secondary income accounts, while the balance of goods and services showed a slight deterioration.

The balance of goods showed an improvement of €1.3 billion in the first half of 2016, which is mainly attributable to the improved oil balance as a result of lower oil prices. Moreover, net payments for purchases of ships decreased, as a large part of the relevant transactions are conducted outside the domestic banking system after the imposition of capital controls. The balance of goods excluding oil and ships did not show any significant change. Αt constant prices, total exports of goods grew by 5.8%, reflecting mainly a 14.1% rise in the volume of oil exports, while exports of goods excluding oil remained almost unchanged.

The surplus of the services balance dropped by €1.5 billion in the first half of 2016, as net transport receipts registered a significant decline, which is largely attributable to the capital controls. Net receipts from travel services also fell. It should be noted that total non-residents' arrivals decreased by 1.6% and the corresponding receipts by 5.8%. These developments were offset to a small extent by an improvement in the other services balance.

The primary income account showed a surplus of €1.2 billion, up by 1.1 billion from the first half of 2015. The secondary income account also improved.

Capital account

In June 2016, the capital account showed a small deficit, against a surplus in June 2015, while in the first half of 2016 it showed a surplus of €645 million, up by €39 million year-on-year.

Combined current and capital account

In June 2016, the combined current and capital account (corresponding to the economy's external financing requirements) showed a surplus of €981 million, up by €339 million year-on-year. In the first half of 2016, the deficit shrank by €1.4 billion, to stand at €1.9 billion.

Financial account

In June 2016, direct investment recorded a decrease of €2.2 billion in assets, which is mainly attributable to the sale of the National Bank of Greece's stake in Finansbank (Turkey). It should be noted that before the sale the NBG Group had held 99.8% of the capital of Finansbank (directly 82.2%, indirectly through NBG Finance (Dollar) plc: 9.68% and through NBG International Holdings B.V.: 7.90%). Liabilities (non-residents' direct investment in Greece) recorded a net increase of €104 million, without any notable transactions.

Portfolio investment showed a decrease of €3.5 billion in assets, mainly attributable to a reduction of €2.9 billion in residents' holdings of foreign bonds and Treasury bills. On the liabilities side, a decrease of €235 million was recorded, which reflects a fall in non-residents' holdings of Greek government bonds and Treasury bills.

In other investment, assets declined by €644 million, caused mainly by the reduction of €607 million due to the statistical adjustment related to the issuance of banknotes. Liabilities fell by €7.2 billion, reflecting a net decrease of €13.7 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included), as well as the effect of the statistical adjustment (€687 million). These developments were partly offset by a net increase of €7.2 billion in the outstanding debt of the public and the private sector to non-residents (including a new ESM loan of €7.5 billion to the Hellenic Republic under the support mechanism for the Greek economy).

In the first half of 2016, residents' net assets from direct investment abroad declined by €1.6 billion, while the corresponding liabilities that represent non-residents' direct investment in Greece increased by €104 million.

Under portfolio investment, residents' net external assets registered an increase of €317 million, which is mainly attributable to a rise of €1.5 billion in residents' holdings of foreign bonds and Treasury bills that was partly offset by a decrease of €1.4 billion in residents' investment in foreign equity. Liabilities fell by €284 million, mainly on account of a decline in non-residents' holdings of Greek government bonds and Treasury bills.

In other investment, assets declined by €5.3 billion, largely reflecting a decrease in resident credit institutions' and institutional investors' deposit and repo holdings abroad, and the statistical adjustment related to the issuance of banknotes (1). On the liabilities side, a decrease of €4.5 billion was recorded, which is attributable to a decrease in non-residents’ deposit and repo holdings in Greece (the TARGET account included), which more than offset the increase in residents’ outstanding debt.

At end-June 2016, Greece’s reserve assets stood at €6.9 billion, compared with €5.1 billion one year earlier.

Note: Balance of payments data for July 2016 will be released on 20 September 2016.



(1) In the January-June 2016 period, assets and liabilities decreased by €1.5 billion each, on account of the statistical adjustment related to the issuance of banknotes.


Related link: Balance of Payments: June 2016 - Table