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In June 2007, the current account deficit grew by €332 million year-on-year, to reach €2,420 million. This development reflects a widening mainly of the income account deficit and, secondarily, of the trade deficit, which was partly offset by the rise in the surpluses of the services balance and the current transfers balance.

The year-on-year increase of €158 million in the overall trade deficit is almost exclusively due to an increase (of €246 billion) in the trade deficit excluding oil and ships and, to a very small extent, in net payments for purchases of ships (of €18 million). By contrast, the net oil import bill dropped (by €106 million).

The overall surplus of the services balance showed a €169 million hike, almost exclusively as a result of a considerable rise in net transport receipts, while net travel receipts showed a limited increase and net payments for other services grew. 

The substantial rise (of €548 million) in the income account deficit is almost exclusively attributable to higher net interest, dividend and profit payments. 

Finally, the surplus of the current transfers balance almost trebled year-on-year, because net EU transfers to general government grew. (It should be recalled that gross current transfers from the EU mainly include receipts from the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in the context of the Common Agricultural Policy, as well as receipts from the European Social Fund, while current transfers to the EU include Greece's contributions (payments) to the Community Budget.)

In the first half of 2007, the current account deficit expanded by €2,366 million over the same period of 2006 and reached €16,709 million, reflecting the growth of the trade deficit and the income account deficit, as well as a decrease in the current transfers surplus. By contrast, the services surplus rose. 

The growth of the overall trade deficit by €1,304 million was mainly a result of increases (of €1,086 million and €540 million respectively) in the trade deficit excluding oil and ships and in net payments for purchases of ships. By contrast, the net oil import bill dropped by €323 million. With respect to the trade balance excluding oil and ships, export receipts grew by €347 million or 6.2%, while the corresponding import bill rose by €1,433 million or 8.3%. 

The services surplus expanded by €554 million, reflecting a rise mainly in net transport receipts and, to a lesser extent, in net travel receipts, while net payments for other services grew. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 10.0% and gross travel receipts by 3.2%. 

The income account deficit rose by €943 million, mainly as a result of higher net interest, dividend and profit payments. 

Finally, underlying the decline of €673 million in the current transfers surplus were on the one hand lower general government receipts from the EU (in the February-June period) and, on the other hand, higher general government payments to the EU (mainly in February).

Capital transfers balance 

In June 2007, the capital transfers balance showed a surplus of €61 million, compared with €57 million in June 2006. (Capital transfers from the EU mainly include receipts from the Structural Funds - except for the European Social Fund - and the Cohesion Fund under the Community Support Framework.) 

In the first half of 2007, the capital transfers balance showed a surplus of €2,337 million, €829 million up year-on-year. This reflects almost exclusively a rise in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3,347 million, which was €156 million higher than in the same period of 2006.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €2,359 million in June 2007, €329 million up year-on-year. In the first half of 2007, this deficit came to €14,372 million, €1,537 million up year-on-year.

Financial account balance

In June 2007, residents' direct investment abroad came to €161 million. The most important investments concerned outflows of €79 million and €15 million, respectively, representing capital injections by EUROBANK and the NATIONAL BANK OF GREECE to their branches in Poland and Albania respectively. During the same month, non-residents’ investment in Greece came to €40 million. Under portfolio investment, a net outflow of €762 million was recorded, which is attributable to the fact that residents’ purchases of, mainly, foreign shares and, secondarily, foreign bonds and Treasury bills (worth €994 million and €817 million respectively), as well as the €531 million decline in non-residents’ holdings of Greek government bonds and Treasury bills more than offset non-residents' purchases of shares of Greek firms (worth €1,628 million). It should be pointed out that, of the inflow for purchases of shares, an amount of €983 million concerned non-residents' participation in the sale of 10.7% of OTΕ' s share capital. "Other" investment recorded a net inflow of €2,953 million, mainly because the drop in resident credit institutions' deposit and repo holdings abroad was partly offset by the decline in non-resident credit institutions corresponding investment in Greece.

In January-June 2007, direct investment showed a net outflow of €2,192 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €548 million, while net outflows of residents' funds for direct investment abroad reached €2,740 million. During the same period, a net inflow of €13,211 million was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds and Treasury bills, of €15.3 billion, as well as shares of Greek firms, of €6.3 billion) was considerably higher than the outflow of residents' funds for investment mainly in foreign bonds and Treasury bills (worth €6.7 billion), as well as shares (worth €1.2 billion). Finally, under "other" investment, a net inflow of €3,520 million mainly reflects the fact that the inflow of non-residents' funds for investment in deposits and repos in Greece more than offset residents' investment in deposits and repos abroad and, to a smaller extent, repayments of loans granted by non-residents to residents.

At end-June 2007, Greece's reserve assets reached €2.1 billion. (It should be recalled that, since Greece joined the euro area in January 2001, reserve assets, as defined by the European Central Bank, include only monetary gold, the "reserve position" with the IMF, "Special Drawing Rights", and Bank of Greece claims in foreign currency on residents of non-euro area countries. Conversely, reserve assets do not include claims in euro on residents of non-euro area countries, claims in foreign currency and in euro on residents of euro area countries, and the Bank of Greece participation in the capital and the reserve assets of the ECB.)

Note: Balance of payments data for July 2007 will be released on 19 September 2007.