Balance of payments: October 2013

20/12/2013 - Press Releases

Current account balance

October 2013

The current account deficit dropped by €225 million year-on-year to €351 million, mainly as a result of a rise in the services surplus – more specifically, higher net travel receipts – and improvements in the current transfers and – secondarily – the income account balance.

The trade deficit recorded a small decline (of €39 million), on account of a markedly higher import bill for ships (up by €197 million). By contrast, the trade balance excluding oil and ships contracted on account of the reduced import bill, while the corresponding export receipts remained flat. Furthermore, the net oil import bill also decreased.

The improvement in the travel balance was the most significant positive development of this month, as a result of higher tourist receipts (up by 20.2%, reflecting an 18.1% increase in non-residents’ arrivals). (It should be noted 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-June 2013 period).

January-October 2013

The current account balance showed a surplus of €2.2 billion, against a deficit of €3.4 billion in the same period of 2012. This development is attributable, primarily, to a significant decline in the trade deficit (down by €2.7 billion) and, secondarily, to increases in the current transfers and services surpluses (up by €2.2 billion and €1.5 billion, respectively). By contrast, the income account deficit increased.

In more detail, the contraction of the trade deficit is largely attributable to the considerably reduced import bill (down by 5.4%), as well as to a 4.5% rise in export receipts. Apart from oil product exports, which account for the bulk of this increase, the contribution of the sectors of foods and beverages, minerals, and non-metallic mineral products was also significant. The decline in imports 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 14.8% 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 fell by 2.1%. (It should be noted 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-June 2013 period).

The income account deficit rose by €783 million year-on-year, mainly due to higher net interest, dividend and profit payments.

Finally, the current transfers balance showed a surplus of €3.65 billion, up by €2.2 billion year-on-year. This development is mainly due to higher general government net transfer receipts (mainly from the EU).

Capital transfers balance

In October 2013, the capital transfers balance showed a small deficit (of just €7.7 million), slightly increased year-on-year. By contrast, in the January-October 2013 period, as a result of higher net transfers to general government, the capital transfers balance recorded a surplus of €2.8 billion, up by €1.2 billion year-on-year.

Due to these developments, the overall transfers balance (current transfers plus capital transfers) showed a surplus of €6.4 billion in the January-October 2013 period, up by €3.4 billion year-on-year.

Combined current account and capital transfers balance

In October 2013, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €359 million, compared with €582 million in October 2012. In the January-October 2013 period, this balance showed a surplus of €5.0 billion, against a deficit of €1.8 billion in the same period of 2012.

Financial account balance

In October 2013, non-residents’ direct investment in Greece showed a net inflow (rise) of €588 million (against a net outflow of €109 million in the same month of 2012). The most significant transaction concerned an inflow of €622 million from the sale of Hellenic Football Prognostics Organisation (OPAP) shares held by the Hellenic Republic Asset Development Fund (HRADF) to Emma Delta Ltd (Cyprus), which thus acquired a 33% stake in OPAP. Residents’ direct investment abroad increased by €34 million (outflow).

Under portfolio investment, a net inflow of €1.0 billion was recorded (against a net outflow of €1.5 billion in October 2012), mainly as a result of a decline in residents’ holdings of foreign bonds and Treasury bills (inflow), and a rise in non-residents’ holdings of shares of Greek firms (inflow).

As regards “other” investment, a net outflow of €1.4 billion was recorded (against a net inflow of €1.6 billion in the same month of 2012), which is mainly attributable to a €2.0 billion decrease (outflow) in non-residents’ deposit and repo holdings in Greece (including the TARGET account). This was partly offset by a €1.2 billion decline (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.

In the January-October 2013 period, non-residents’ direct investment in Greece showed a net inflow of €822 million, whereas residents’ direct investment abroad showed a net inflow (disinvestment) of €675 million.

Under portfolio investment, a net outflow of €6.4 billion was recorded (compared with a net outflow of €77.1 billion in the same period of 2012), mainly due to a drop in non-residents’ holdings of Greek government bonds and Treasury bills. This was partly offset by inflows due to non-residents’ purchases of shares of Greek firms and a decline in residents’ investment in foreign bonds, Treasury bills and shares.

Under “other” investment, a net inflow of €944 million was recorded (compared with a net inflow of €78.9 billion in the same period of 2012). This is chiefly attributable to a €27.8 billion increase in the outstanding debt of the public and the private sector to non-residents, as well as to a €17.3 billion decline in resident institutional investors’ deposit and repo holdings abroad (inflows). These developments were partly offset by a €42.9 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).

At end-October 2013, Greece’s reserve assets stood at €4.5 billion, compared with €5.9 billion at end-October 2012.

Note: Balance of payments data for November 2013 will be released on 24 January 2013.