Press Releases

Balance of payments: JANUARY-JUNE 2000

22/09/2000 - Press Releases

Current account balance

The current account deficit stood at 1,792 million euro in the May-June 2000 period, compared with 1,010 million euro in the corresponding period of 1999. As a result, it grew by 2,179 million euro in the first half of 2000 compared with that in the corresponding period of last year. Around 50 per cent of this increase stemmed from net oil import bill, which more than tripled.

The trade deficit increased substantially relative to the first half of 1999, despite the strong growth of export receipts, associated with the pick-up in economic activity in both the European Union and the countries of the Balkans and the former USSR. The increase in fuel expenditure was mainly due to the rise in average crude oil prices, which reached 26.85 US dollars per barrel in the first half of 2000, compared with 13.38 dollars in the corresponding 1999 period, as well as to the strengthening of the US dollar against the euro. Moreover, increased demand for non-oil imports concerned mainly: a) machinery and computer equipment, b) electrical appliances and wired and mobile telephone equipment and c) passenger cars. Car imports continued to remain at high levels in the first half of 2000, chiefly supported by the expansion of consumer loans, while the rise observed in imports of other categories of goods was directly associated with the fact that investment activity rose much faster than GDP, while the growth of disposable income accelerated.

The services surplus increased by 347 million euro in the first half of 2000, owing to the doubling of transportation receipts and the considerable rise in travel receipts. Finally, the transfer account (whose surplus rose by 1,259 million euro over the same period) improved significantly, mainly because of the rise in net transfers from the EU.

Financial account balance

The most important developments in the financial account over the May-June 2000 period concerned the growth of net inflows for direct and portfolio investment (+244 million euro and +511 million euro, respectively). Direct investment net inflows were mainly associated with non-residents' holdings with domestic firms of the financial sector. In the same period, "other investment" (whose movements chiefly concern deposits, by credit institutions in particular, as well as loans contracted or paid off by general government) recorded a small net outflow, against an inflow of roughly equal size in the May-June 1999 period.

Overall, in the first half of 2000, net capital inflows for direct investment stood at a lower level than in 1999, because in the January-March 2000 period domestic capital outflows for investment abroad overshot corresponding inflows. Portfolio investment also fell short of corresponding net inflows in the first half of 1999 (3,563 million euro against 4,444 million euro). Lastly, "other investment" demonstrated an outflow amounting to 1,874 million euro.

As a result of developments in both the current and the financial account, the country's foreign exchange reserves (errors and omissions inclusive) dropped to 15.7 billion US dollars (or 16.4 billion euro) at end-June 2000, from 18.9 billion US dollars at end-1999. According to the latest data available, Greece's foreign exchange reserves amounted to 15.4 billion US dollars at the end of August 2000.

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