Balance of payments: July 2010
20/09/2010 - Press Releases
Current account balance
In July 2010, the current account deficit came to €1,482 million, down by 11.1% or €185 million year-on-year. This improvement is mainly attributable to a decrease in the trade deficit and, secondarily, a small rise in the surplus of the services balance. These developments were partly offset by an increase in the income account deficit and a decline in the surplus of the current transfers balance.
The narrowing of the trade deficit was accounted for by decreases of €469 million and €107 million in the trade deficit excluding oil and ships and in net payments for purchases of ships, respectively. These developments more than offset a €315 million rise in the net oil import bill. Specifically, exports of goods excluding oil and ships grew (albeit marginally) by 0.3% year-on-year, after exhibiting a negative annual rate of change up to June. Imports of goods excluding oil and ships registered a drop of 16.5% year-on-year, which was much sharper than in the first half of 2010, when their average rate of decrease was 8.7% year-on-year.
The surplus of the services balance showed a small rise of €65 million as a result of a €107 million increase in net receipts from transport services and a €67 million decrease in net payments for “other” services. By contrast, net travel receipts in July fell by €109 million year-on-year. It should be noted that in July travel receipts declined rather moderately (by 4.7%) year-on-year, whereas in June they had fallen by 15.7% year-on-year. Receipts from transport services (mainly from merchant shipping) continued to grow strongly in July (by 14.7% year-on-year).
The income account deficit rose by €62 million, mainly due to higher net payments for interest, dividends and profits.
Finally, the surplus of the current transfers balance shrank by €78 million year-on-year, reflecting lower receipts of general government (net EU transfers) and of the other sectors (mainly emigrants’ remittances). (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-July 2010 period, the current account deficit fell by 0.9% or €154 million year-on-year, whereas it had increased by 0.2% the first half of 2010. This reflects mainly a fall in the trade deficit and a rise in the surplus of the services balance and, secondarily, a small decline in the income account deficit. By contrast, the surplus of the current transfers balance narrowed.
The narrowing in the overall trade deficit by €358 million stemmed from a decrease of €1,549 million in the trade deficit excluding oil and ships. Specifically, the relevant import bill fell by €1,822 million or 9.9%, whereas the corresponding export receipts declined by €273 million or 4.1%. By contrast, the net oil import bill rose by €1,156 million or 26.8%; net payments for purchases of ships grew marginally by €35 million or 1.6%.
The €199 million increase in the surplus of the services balance mainly reflects higher net transport receipts. Gross receipts from transport services (chiefly from merchant shipping) increased by 14.7% year-on-year, whereas the corresponding payments grew by 18.9%; as a result, net transport receipts rose by €410 million. By contrast, net travel receipts fell by €362 million, as travel spending in Greece by non-residents dropped by €473 million or 9.0%, whereas travel spending abroad by residents of Greece declined less (by €111 million or 8.2%). Finally, net payments for “other” services decreased by €150 million.
The income account deficit narrowed slightly year-on-year (by €41 million), reflecting lower net payments for interest, dividends and profits.
Finally, the surplus of the current transfers balance fell by €444 million year-on-year. This reflects decreases of €336 million in the net receipts of the “other sectors” (emigrants’ remittances etc.) and of €108 million in net EU transfers to general government.
Capital transfers balance
In July 2010, the capital transfers balance showed a surplus of €664 million, compared with €355 million in July 2009. (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-July 2010 period, the capital transfers balance showed a surplus of €801 million, compared with €1,256 million in the corresponding period of 2009. This chiefly reflects a decline in EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €1,905 million, compared with a surplus of €2,805 million in the corresponding period of 2009.
Combined current account and capital transfers balance
In July 2010, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €818 million, compared with a deficit of €1.3 billion in July 2009. In the January-July 2010 period, the deficit of the combined current account and capital transfers balance came to €15.2 billion, compared with €14.9 billion in the corresponding period of 2009 (up by 2.0%).
Financial account balance
In July 2010, non-residents’ direct investment in Greece recorded a net inflow of €323 million. The most important transactions concerned: (a) a €348 million inflow for the acquisition of the bakery branch of Vivartia (formerly Chipita) of the MIG group by the special purpose vehicle UIFB (Cyprus), a concern of the Saudi group Olayan; (b) a €120 million outflow for the acquisition by Carrefour Marinopoulos SA of the holdings of Distribuidora International de Alimentacion SA (Spain) and Schoptish Holdings Ltd (Cyprus) in Dia Hellas SA; and (c) a €60 million outflow for the acquisition by the Mytilineos SA group of the holding of Endesa SA (Spain) in Endesa Hellas SA. Finally, residents’ direct investment abroad showed a net outflow of €60 million, but no important transactions were recorded.
Under portfolio investment, a net outflow of €1.2 billion was recorded, reflecting mainly a €1.8 billion decrease (outflow) in non-residents’ investment in Greek government bonds and Treasury bills and a €0.3 billion rise (outflow) in residents’ holdings of foreign shares. These developments were only partly offset by decreases (inflows) of €0.5 billion and €0.4 billion in residents’ holdings of foreign bonds/Treasury bills and foreign derivatives, respectively.
Under “other” investment, a net inflow of €2.3 billion was recorded, which mainly reflects a €2.3 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece and a €0.6 billion decline (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, which was partly offset by a €0.6 billion decrease (outflow) in the outstanding external debt of the public and the private sector (including repayments of loans of general government amounting to €442 million).
In the January-July 2010 period, direct investment showed a net inflow of €1.2 billion. Specifically, net inflows of non-residents’ funds for direct investment in Greece reached €1.6 billion (compared with a net inflow of €2.2 billion in the corresponding period of 2009), while an outflow of €0.4 billion was recorded under residents’ direct investment abroad.
During the same period, a net outflow of €6.2 billion was recorded under portfolio investment (against a net inflow of €23.7 billion in the corresponding period of 2009). Specifically, outflows were recorded due to decreases of €14.3 billion and €1.1 billion in non-residents’ purchases of Greek government bonds/Treasury bills and shares of Greek firms, respectively. There was also a €1.1 billion outflow due to a rise in residents’ holdings of foreign shares. These outflows were only partly offset by a €10.3 billion inflow owing to a decline in resident credit institutions’ and institutional investors’ holdings of foreign bonds and Treasury bills.
Under “other” investment, a net inflow of €21.4 billion (against a net outflow of €9.4 billion in the corresponding period of 2009) is mainly attributable to general government borrowing of €18.9 billion (as mentioned in the press release for May 2010), as well as a €17.7 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece. These developments were offset to a significant degree by a €15.7 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.
At end-July 2010, Greece’s reserve assets stood at €4.6 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.)
BALANCE OF PAYMENTS (EUR millions - provisional)
Note: Balance of payments data for August 2010 will be released on 20 October 2010.
: Balance of payments data for August 2010 will be released on 20 October 2010.