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Balance of payments: July 2014

22/09/2014 - Press Releases

Current account balance

In July 2014, the current account balance showed a surplus of €1.7 billion, down by €1.1 billion year-on-year. However, it should be noted that last July’s significantly higher surplus was mainly due to an inflow of €1.5 billion – recorded in the current transfers balance – representing the first disbursement under the Securities Markets Programme (SMP). Barring this exceptional inflow, the current account surplus in July 2013 would have been lower than in July 2014. The services surplus rose and the income account deficit fell in July 2014. By contrast, the trade deficit increased. In any event, the overall balance of goods and services showed a surplus of €1.6 billion, compared with €1.4 billion in July 2013.

The trade deficit rose by €211 million year-on-year, mainly as a result of the higher net oil import bill. Net payments for purchases of ships also recorded a slight increase. The deficit of the balance of goods excluding oil and ships contracted given that receipts from exports in this category rose by 11.3%, while the corresponding import bill also increased, albeit at a slower pace.

The surplus of the services balance grew by €472 million year-on-year, mainly as a result of higher surpluses on the travel, transport (mainly sea transport) and other services balances. In more detail, travel receipts increased by 14.4%, reflecting a 29.4% rise in non-residents’ arrivals.

In the January-July 2014 period, the current account surplus came to €567 million, up by €169 million year-on-year. This development is attributable to improvements in the services and income account balances, which more than offset the higher trade deficit and the lower current transfer’s surplus.

In more detail, as regards the trade deficit, the significantly higher net import bill for oil and for ships more than offset a contraction in the deficit of the balance of goods excluding oil and ships. This contraction is attributable to a rise in export receipts, given that the corresponding import bill remained almost unchanged. As a result of these developments, the trade deficit rose by €984 million.

The €1.7 billion rise in the surplus of the services balance is due to increased net transport receipts, as well as higher net receipts from travel and other services. As regards travel spending by non-residents in Greece, a year-on-year increase of 13.8% was recorded, reflecting a 20.8% rise in non-residents’ arrivals.

The income account deficit fell by €534 million, mainly as a result of lower net interest payments.

Finally, the current transfers balance showed a surplus of €2.8 billion, down by €1.1 billion year-on-year, mainly as a result of a decline in general government transfer receipts under the Securities Markets Programme (SMP) in July, as mentioned above.

Capital transfers balance

In July 2014, the capital transfers balance showed a much smaller surplus than in July 2013, when it grew substantially on account of EU transfers to general government. In the January-July 2014 period, the surplus of the capital transfers balance came to €1.85 billion, compared with €2.8 billion over the same period in 2013.

In the January-July 2014 period, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €4.6 billion, down by €2 billion year-on-year.

Combined current account and capital transfers balance

In July 2014, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a surplus of €1.7 billion, compared with €4.5 billion in July 2013. In the January-July 2014 period, this balance recorded a surplus of €2.4 billion, compared with €3.2 billion in the same period of 2013.

Financial account balance

In July 2014, non-residents’ direct investment in Greece showed an increase (net inflow) of €83 million. The most important transaction concerned a €78 million inflow for the participation of Consolidated Lamda Holdings S.A. (Luxembourg) in the capital increase of its subsidiary Lamda Development S.A. Residents’ direct investment abroad recorded an increase (net outflow) of €5 million, without any remarkable transactions.

Under portfolio investment, a net outflow of €766 million was recorded, chiefly on account of a net increase (outflow) in residents’ holdings of foreign bonds and Treasury bills, which was mainly offset by a net increase (inflow) in non-residents’ investment in Greek government bonds and Treasury bills.

Under “other” investment, a net outflow of €486 million was recorded mainly on account of a decline (outflow) in non-residents’ deposit and repo holdings in Greece and a rise (outflow) in residents’ deposit and repo holdings abroad, which were partly offset by a net increase (inflow) in the outstanding debt of the public and the private sector to non-residents.

In the January-July 2014 period, non-residents’ direct investment in Greece showed a net inflow of €1.0 billion, while residents’ direct investment abroad showed a net outflow (increase) of €304 million.

Under portfolio investment, a net inflow of €3.8 billion was recorded, mainly on account of a rise in non-residents’ holdings of shares of Greek firms. This development was partly offset by a net increase in residents’ holdings of foreign bonds, Treasury bills and financial derivatives.

Under “other” investment, a net outflow of €5.6 billion was recorded mainly on account of a decline (outflow) in non-residents’ deposit and repo holdings in Greece, which was largely offset by a net increase (inflow) in the outstanding debt of the public and the private sector to non-residents and a net decrease (inflow) in residents’ deposit and repo holdings abroad.

At end-July 2014, Greece’s reserve assets stood at €5.0 billion, compared with €4.6 billion at end-July 2013.

Note: Balance of payments data for August 2014 will be released on 21 October 2014.

Related link: Balance of payments: July 2014

 

 

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