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22/05/2017 - Balance of Payments – March 2017

Current account

In March 2017, the current account showed a deficit of €1.3 billion, up by €551 million year-on-year. This development is mainly attributable to an increase in the deficit of the balance of goods, which more than offset a rise in the surplus of the services balance, and to decreases in the surpluses of the primary and secondary income accounts. The total value of exports of goods and services grew by 23.2%, but the corresponding imports increased more in absolute terms, resulting in a deterioration in the overall balance of goods and services.

The deficit of the balance of goods grew year-on-year, mainly as a result of a rise in the deficit of the oil balance, owing to higher international oil prices. The deficit of the non-oil balance of goods also increased slightly, as non-oil imports of goods grew stronger than the corresponding exports. Non-oil exports of goods rose by 14.6% at current prices and by 11.5% at constant prices.

The surplus of the services balance expanded by €92 million year-on-year, as a result of improvements in all subaccounts. More specifically, the improvement in the travel balance is due to the fact that the decline in spending by residents travelling abroad was larger than the decline in spending by non-residents travelling to Greece. Travel receipts fell by 7.8%, and arrivals did not change appreciably (-0.2%).

In March 2017, the surplus of the primary income account dropped by €172 million year-on-year, mainly as a result of a decline in net receipts under other primary income, which includes taxes and subsidies on products and production. The surplus of the secondary income account fell by €45 million year-on-year, due to a deterioration in the balance of the general government sector.

In the first quarter of 2017, the current account showed a deficit of €2.5 billion, up by €160 million year-on-year. This development is attributable to the higher deficit of the balance of goods, which was partly offset by the increased surpluses of the services balance, the primary income and the secondary income accounts. The overall balance of goods and services recorded a deficit that was higher by €594 million year-on-year, as a rise in exports was offset by an increase in imports.

The deficit of the balance of goods increased in the first quarter of 2017 compared with the first quarter of 2016, mainly as a result of a rise in the deficit of the oil balance. An increase was also recorded in the deficit of the balance of goods excluding oil. Specifically, exports of goods excluding oil grew by 5.9% at constant prices and the corresponding imports by 6.5%.

The surplus of the services balance rose by €345 million compared with the first quarter of 2016, reflecting improvements in all subaccounts. In more detail, travel receipts fell by 4.8% and non-residents’ arrivals by 1.8%, but this development was more than offset by a decline in spending by residents travelling abroad, which resulted in an improvement of the travel balance. Moreover, transport receipts increased by 17.9% year-on-year.
In the first quarter of 2017, the primary and secondary income accounts improved year-on-year.

Capital account

In March 2017, the capital account showed a small deficit, against a surplus in March 2016, due to a drop in net capital transfers from the EU to general government. In the first quarter of 2017, the capital account registered a surplus of €236 million, down by €453 million year-on-year.

Combined current and capital account

In March 2017, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €1.3 billion, €625 million higher than the deficit one year earlier. In the first quarter of 2017, it showed a deficit of €2.3 billion, €613 million higher year-on-year.

Financial account

In March 2017, under direct investment, residents' external assets rose by €530 million; the most important transaction concerned the participation of Alpha Bank S.A. in the capital increase of AGI-Cypre Ermis Ltd (Cyprus), a subsidiary of the Alpha Bank Group. Residents' external liabilities, which represent non-residents' direct investment in Greece, increased by €729 million; the most important transaction concerned the direct participation of Fraport AG (Germany) and Slentel Ltd (Cyprus) in the capital increase of the subsidiaries that took over the management of regional airports in Greece, and the extension of intra-group loans to these subsidiaries.

Under portfolio investment, a net rise in residents' external assets is chiefly attributable to an increase of €1.9 billion in residents' holdings of foreign bonds and Treasury bills. A net decrease in liabilities reflects mainly a fall of €447 million in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a net decrease in residents' assets reflects mainly a decline of €1.2 billion in residents' (credit institutions' and institutional investors') deposit and repo holdings abroad. Under the same category, a net rise in liabilities principally reflects chiefly an increase in non-residents' deposit and repo holdings in Greece (€2.5 billion, the ΤARGET account included). At the same time, the outstanding debt of the public and the private sector to non-residents declined (down by €339 million, including the repayment of a €151 million loan by the Greek government to the IMF), which partly offset the above rise.

In the first quarter of 2017, under direct investment, residents' external assets rose by €813 million and the corresponding liabilities grew by €1.1 billion.

Under portfolio investment, there was a net increase in residents' external assets that is chiefly attributable to a rise of €911 million in residents' holdings of foreign bonds and Treasury bills. Under the same category, a net decrease in liabilities reflects mainly a fall of €180 million in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a net drop in residents' assets principally reflects a decrease owing to the statistical adjustment (€1.1 billion) related to holdings of euro banknotes and a fall of €1.2 billion in residents' (credit institutions' and institutional investors') deposit and repo holdings abroad. Under the same category, a net decline in liabilities reflects mainly a drop in the outstanding debt of the public and the private sector to non-residents (€2.5 billion), which, combined with the statistical adjustment (€1.0 billion), more than offset a rise in non-residents' deposit and repo holdings in Greece (€3.4 billion, the ΤARGET account included).

At end-March 2017, Greece’s reserve assets stood at €6.5 billion, compared with €6.6 billion at end-March 2016.

Note: Balance of payments data for April 2017 will be released on 20 June 2017.

Related link: Balance of Payments – March 2017 -  Table