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Balance of Payments: May 2020

21/07/2020 - Press Releases

Current account

In May 2020, the current account registered a deficit of €914 million, against a surplus of €270 million in May 2019, as a result of a deterioration in the services balance and the secondary income account, which was partly offset by improvements in the balance of goods, as well as in the primary income account.

The deficit of the balance of goods shrank, as imports decreased more than exports. The decline in both exports and imports is largely due to a fall in oil exports and imports, which was driven also by lower international oil prices. Non-oil exports of goods dropped by 18.7% at current prices (18.1% at constant prices), while the corresponding imports declined at a faster pace of 27.8% (27.1% at constant prices).

The surplus of the services balance declined considerably, mainly reflecting a contraction in the surplus of the travel balance, which fell to almost zero, as non-residents’ arrivals and the corresponding receipts declined by 97.7% and 99.2%, respectively. At the same time, the corresponding payments decreased by 98.2%. A decline of 20.6% was also registered in the transport balance on account of a deterioration in the sea and air transport balances.

The surplus of the primary income account rose, while the secondary income account recorded a deficit, against a surplus year-on-year, which was largely due to the transfer of SMP/ANFA profits to the Greek Government in May 2019. The relevant transfer for 2020 will be recorded in July 2020.

In the January-May 2020 period, the current account deficit came to €5.6 billion, up by €706 million year-on-year, as the deterioration in the services balance and the secondary income account more than offset the improvement in the balance of goods and the primary income account.

The deficit of the balance of goods narrowed, as imports decreased at a faster pace than exports. Developments in imports and exports largely reflect developments in oil imports and exports respectively, as mentioned earlier. Non-oil exports of goods dropped by 4.1% at current prices (3.6% at constant prices), while the corresponding imports fell by 11.6% (11.1% at constant prices).

The surplus of the services balance decreased by half, due to a deterioration across its sub-components, mostly the travel balance. Νon-residents’ arrivals and relevant receipts fell by 63.8% and 78.5%, respectively. Turning to the transport balance, its surplus shrank by 20.4%.

Capital account

In May 2020, the capital account showed a surplus of €203 million, against a deficit of €24 million year-on-year, mostly due to higher general government receipts. In the January-May 2020 period, the capital account showed a surplus of €594 million, up by €403 million year-on-year.

Combined current and capital account

In May 2020, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a deficit of €711 million, against a surplus of €246 million year-on-year. In the January-May 2020 period, the deficit stood at €5.0 billion, up by €303 million year-on-year.

Financial account

In May 2020, under direct investment, residents’ external liabilities (non-residents’ direct investment in Greece) rose by €218 million and their external assets increased by €81 million.

Under portfolio investment, residents’ external assets recorded an increase, as a result of a rise of €4.1 billion in residents’ holdings of foreign bonds and Treasury bills. A decrease in residents’ external liabilities was mainly due to a decline of €2.1 billion in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, a decline in residents’ external assets is mainly the result of a decrease of €489 million in domestic credit institutions’, institutional investors’ and firms’ deposit and repo holdings abroad, which was partly offset by the statistical adjustment related to the issuance of banknotes. An increase in residents’ external liabilities reflects almost exclusively a rise of €6.4 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included).

In the January-May 2020 period, under direct investment, residents’ external liabilities (stemming from non-residents’ direct investment in Greece) increased by €1.2 billion.

Portfolio investment showed an increase in residents’ external assets, mainly as a result of a rise of €14.7 billion in residents’ holdings of foreign bonds and Treasury bills. The decline in residents’ external liabilities is mainly due to a decrease of €7.4 billion in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, an increase of €2.4 billion in residents’ external assets primarily reflects the statistical adjustment related to the issuance of banknotes. An increase in residents’ external liabilities mainly reflects a rise of €20.3 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included) and an increase of €7.2 billion in the outstanding debt of the public and the private sector to non-residents.[1]

At end-May 2020, Greece’s reserve assets stood at €8.7 billion, compared with €6.5 billion at end-May 2019.

Note: Balance of payments data for June 2020 will be released on 20 August 2020.

 

[1] It is pointed out that in the January-May 2020, developments under portfolio and other investment were largely driven by loan securitisations carried out by systemic credit institutions in previous months (see Bank of Greece, Press release on: Balance of Payments, March 2020 and April 2020).

 

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