Balance of payments: JUNE 2009
18/08/2009 - Press Releases
Current account balance
In June 2009, the current account deficit dropped by
€633 million year-on-year to €2,344 million, reflecting mainly a large
contraction of the trade deficit. Moreover, the income account deficit fell
slightly. At the same time, however, the surplus of the services balance
narrowed, while the current transfers balance shifted to a deficit, from a
surplus in June 2008.
The €1,538 million decline in the overall trade deficit
stemmed from a €1,039 million drop in the trade deficit excluding oil and ships
(as the import bill fell by 31.6%, i.e. at a rate almost double that of export
receipts, which decreased by 16.9%) and declines of €407 million and €92 million
in the net oil import bill and net payments for purchases of ships, respectively.
The surplus of the services balance shrank by €546
million, mainly owing to a fall in net transport and travel receipts (of €356
million and €164 million, respectively). Specifically, non-residents’ travel
spending in Greece dropped by 10.4%, while residents’ travel spending abroad
remained almost unchanged year-on-year (it only rose by 1.8%). Regarding the
transport balance, both receipts and payments fell considerably (by 34.7% and
28.7%, respectively). The income account deficit decreased by €70 million,
mainly owing to lower net interest, dividend and profit payments. Finally, the
current transfers balance shifted to a deficit of €145 million, from a surplus
of €285 million in June 2008, mainly because general government receipts from
the EU declined substantially and the corresponding payments doubled. (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 January-June 2009, the current account deficit
narrowed by €4,407 million or 23.0% year-on-year and reached €14,740 million,
reflecting a large decrease in the trade deficit. At the same time, however, the
surpluses of the services balance and the current transfers balance shrank,
while the income account deficit did not show any remarkable change (it rose by
a mere 0.9%).
The €7,414 million drop in the overall trade deficit is
attributable to decreases of €4,349 million, €2,356 million and €709 million in
the trade deficit excluding oil and ships, the net oil import bill and net
payments for purchases of ships, respectively. Regarding the trade deficit
excluding oil and ships, the import bill fell by €5,279 million or 25.4%, i.e.
much more than export receipts, which declined by €930 million or 14.2%.
The surplus of the services balance shrank by €2,034
million, mainly reflecting lower net transport and travel receipts. It should be
noted that gross transport receipts (chiefly from merchant shipping) fell
considerably (by 28.4%); as a result, net transport receipts dropped by €1,480
million. Moreover, travel spending in Greece by non-residents and travel
spending abroad by residents decreased (by 14.7% and 5.4%, respectively); as a
result, net travel receipts declined by €463 million. Finally, payments for
“other” services grew by €90 million.
The income account deficit was contained at around last
year’s levels, because net interest, dividend and profit payments showed a small
decrease, as a result of international money market developments. Finally, the
surplus of the current transfers balance showed a decline of €930 million,
almost half of which is attributable to the decrease recorded in June 2009, as
already mentioned.
Capital transfers balance
In June 2009, the capital transfers balance showed a
surplus of €74 million, almost unchanged year-on-year. (Capital transfers mainly
include receipts from the Structural Funds – except for the European Social Fund
– and the Cohesion Fund under the Community Support Framework.)
In January-June 2009, the capital transfers balance
showed a surplus of €902 million, compared with €2,184 million in the same
period of 2008. This mainly reflects a decline in EU capital transfers to
general government. Thus, the overall transfers balance (current transfers plus
capital transfers) recorded a surplus of €2,355 million, compared with €4,567
million in the same period of 2008.
Combined current account and capital transfers balance (according
to the old method of presentation)
The deficit of the combined current account and capital
transfers balance (which reflects the economy’s external financing requirements)
came to €2,269 million in June 2009, compared with €2,900 million in June 2008.
In the January-June 2009 period, this deficit reached €13,838 million, compared
with €16,963 million in the same period of 2008, i.e. it dropped by 18.4%.
Financial account balance
In June 2009, residents’ direct investment
abroad showed a net outflow of €116 million. The most important transaction in
this category concerned a €25 million outflow for the acquisition of shares of
Bank Post SA (Romania) by EUROBANK. Non-residents’ direct investment in Greece
recorded a net inflow of €151 million. The most important transaction in this
category concerned a €95 million inflow for the acquisition of 50% of the
company HERON II VIOTIA THERMOELECTRIC STATION SA by the Dutch company
ELECTRABEL INTERNATIONAL.
Under portfolio investment, a net inflow of €3.3 billion was
recorded, mainly reflecting a €3.6 billion increase (inflow) in non-residents’
investment in Greek bonds and Treasury bills, which was offset to a very small
extent by a €0.2 billion rise (outflow) in residents’ purchases of foreign bonds
and Treasury bills and a €0.2 billion decline in non-residents’ investment in
shares of Greek firms.
Under “other” investment, an outflow of €0.9 billion
was recorded, which is almost equal to the outflow for the repayment of loans
granted to the public and the private sector by non-residents. The €6.7 billion
increase (inflow) in non-resident credit institutions’ and institutional
investors’ deposit and repo holdings in Greece offset an equal (€6.7 billion)
rise (outflow) in residents’ corresponding deposit and repo holdings abroad.
In January-June 2009, direct investment showed a
net inflow of €1.2 billion. Specifically, net inflows of non-residents’ funds
for direct investment in Greece came to €1,706 million, while net outflows of
residents’ funds for direct investment abroad reached €506 million.
During the same period, a net inflow of €23.2 billion
was observed under portfolio investment. This mainly reflects inflows due to non-residents’
purchases of Greek government bonds and Treasury bills (of €20.8 billion), as
well as an inflow owing to a €2.9 billion decrease in residents’ investment in
foreign bonds and Treasury bills.
Finally, under “other” investment, a net outflow of
€9.8 billion reflects a €15.4 billion increase (outflow) in resident credit
institutions’ and institutional investors’ deposit and repo holdings abroad and
a €2.9 billion outflow for the repayment of loans granted by non-residents to
both the public and the private sector. These developments by far more than
offset the inflow recorded due to a €8.6 billion rise in non-residents’ deposit
and repo holdings in Greece
At end-June 2009, Greece’s reserve assets stood at €2.7
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 2009 will be released
on 18 September 2009.