Balance of payments: November 2011

20/01/2012 - Press Releases

Current account balance

In November 2011, the current account balance showed a deficit of €2,303 million, down by €180 million or 7.3% year-on-year.

The trade deficit fell by €164 million owing to a decline in the non-oil trade deficit. More specifically, receipts from exports of goods excluding oil and ships rose by €229 million or 22.5%, while the corresponding import bill declined by €63 million or 2.9%. Also, net payments for purchases of ships decreased by €177 million, while the net oil import bill rose by €305 million.

The surplus of the services balance grew by €133 million as a result of, mainly, higher net transport receipts and, secondarily, net travel receipts, while net payments for “other” services decreased considerably compared to November 2010. In more detail, travel spending in Greece by non-residents fell by 12.5% in November 2011, while travel spending abroad by residents declined by 21.6%. Gross transport receipts (chiefly from merchant shipping) did not change considerably, but the corresponding payments dropped, by 13.0%; as a result, net receipts grew by 19.2%.

The income account deficit increased by €63 million owing to higher net payments for interest, dividend and profits.

Finally, the deficit of the current transfers balance rose by €55 million higher year-on-year, reflecting a €71 million increase in general government net transfer payments (chiefly to the EU). (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), 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 January-November 2011 period, the current account deficit fell by €2.3 billion or 10.7% year-on-year, to €18.9 billion. This primarily reflects a substantial decline of €3.4 billion in the non-oil trade deficit and a rise in the surpluses of both the services balance and the current transfers balance (by €1.3 billion and €0.2 billion, respectively), which more than offset a large increase in the net oil import bill and a widening of the income account deficit.

In more detail, the overall trade deficit shrank by €1.6 billion, as a result of a €3.0 billion (or 20.4%) decrease in the trade deficit excluding oil and ships and a €0.4 billion fall in net payments for purchases of ships. By contrast, the net oil import bill rose by €1.8 billion. A particularly positive development was the fact that receipts from exports of goods excluding oil and ships grew strongly (by 19.4%). However, the corresponding import bill registered a rather limited decline (of a mere 4.1%).

The increase in the surplus of the services balance reflects higher net travel receipts and lower net payments for “other” services, which more than offset a contraction in net transport receipts. More specifically, travel spending in Greece by non-residents grew markedly (by 9.7%) year-on-year, while travel spending abroad by residents rose by only 4.6%. According to data from the Bank of Greece’s border survey, in the January-November 2011 period non-residents’ arrivals rose at an average annual rate of 9.6%. During the same period, gross transport receipts (chiefly from merchant shipping) fell by 9.2% and the corresponding payments dropped by 11.0%; as a result, net receipts shrank by €474 million.

The income account deficit rose by €717 million year-on-year, almost exclusively due to higher net payments for interest, dividend and profits (up by 8.7%).

Finally, the current transfers balance showed a surplus of €347 million, up by €166 million compared with the same period of 2010. This development is due to the fact that general government net transfer receipts (mainly from the EU) rose by €308 million, more than offsetting a €142 million increase in the net transfer payments of other – than general government – sectors (chiefly emigrants’ remittances).

Capital transfers balance

In November 2011, the capital transfers balance showed a surplus of €0.7 billion, compared with €0.1 billion in November 2010, reflecting a corresponding increase in net capital transfers from the EU to general government. (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 January-November 2011 period, the capital transfers balance showed a surplus of €1.9 billion, compared with €0.9 billion in the corresponding period of 2010. This reflects almost exclusively a rise in net EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2.2 billion, up by €1.2 billion year-on-year, reflecting the above-mentioned positive development in EU capital transfers.

Combined current account and capital transfers balance

In November 2011, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €1.6 billion, compared with €2.4 billion in November 2010. In the January-November 2011 period, this balance showed a deficit of €17.0 billion, compared with €20.3 billion in the corresponding period of 2010 (down by 16.1%, i.e. at a faster pace than the current account deficit).

Financial account balance

In November 2011, non-residents’ direct investment in Greece showed a net outflow of €93 million (disinvestment), mainly due to negative reinvested earnings (i.e. losses rather than profits on the balance sheets of direct investors in Greece). A significant transaction in the reviewed month was an inflow of €33 million for the participation of the Norwegian firm Odfjell Offshore Ltd. in the capital increase of the Greek-owned joint venture Deep Sea Metro Ltd. (the main business activity of which is leasing out its floating rigs). Residents’ direct investment abroad recorded a net outflow of €32 million, without any remarkable transaction.

Under portfolio investment, a net outflow of €1.3 billion was recorded, chiefly reflecting a €775 million increase in residents’ investment in foreign bonds and Treasury bills (outflow), as well as a €471 million decrease in non-residents’ investment in Greek bonds and Treasury bills (outflow).

Under “other” investment, a net inflow of €2.4 billion was recorded, which mainly reflects a €3.3 billion net decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). There was also a €724 million increase in the outstanding debt of the public and the private sector to non-residents (inflow). By contrast, non-residents’ deposit and repo holdings in Greece fell by €1.6 billion (outflow).

In the January-November 2011 period, direct investment showed a net outflow of €1.9 billion, compared with a net outflow of €0.3 billion in the corresponding period of 2010. Specifically, net outflows of residents’ funds for direct investment abroad reached €1.3 billion, while non-residents’ investment in Greece showed a net outflow (disinvestment) of €0.6 billion.

A net outflow of €17.2 billion was observed under portfolio investment, compared with a net outflow of €24.1 billion in the corresponding period of 2010. In more detail, an outflow was recorded due to, mainly, a decrease of €21.6 billion in non-residents’ holdings of Greek bonds and Treasury bills and, secondarily, a €657 million increase in residents’ investment in foreign derivatives and a €244 million decline in non-residents’ holdings of shares of Greek firms. These developments were only partly offset by a €5.2 billion decline in resident institutional investors’ holdings of foreign bonds and Treasury bills and a €126 million drop in residents’ holdings of shares of foreign firms.

Under “other” investment, a net inflow of €36.2 billion (compared with a net inflow of €45.5 billion in the corresponding period of 2010) is mainly attributable to a €31.0 billion increase in the net outstanding debt of the public and the private sector to non-residents. In particular, net general government borrowing came to €31.6 billion and gross general government borrowing under the support mechanism for the Greek economy came to €33.4 billion. There was also a €2.3 billion increase in non-residents’ deposit and repo holdings in Greece and a €3.5 billion decrease in residents’ deposit and repo holdings abroad.

At end-November 2011, Greece’s reserve assets stood at €5.3 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. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

Note: Balance of payments data for December 2011 will be released on 20 February 2012.