Balance of payments: December 2009
19/02/2010 - Press Releases
Current account balance
In December 2009, the current account deficit reached €3,164 million, slightly higher than in December 2008 (€3,133 million). The contraction of the trade deficit was offset by declines in the surpluses of the services balance and the current transfers balance and a small increase in the income account deficit.
The €285 million fall in the overall trade deficit stemmed from a decrease of €403 million in the trade deficit excluding oil and ships, mainly due to a drop in the import bill, while export receipts did not show any significant change. By contrast, the net oil import bill and net payments for purchases of ships rose by €51 and €67 million, respectively.
The surplus of the services balance shrank by €83 million, mainly owing to a €111 million fall in net transport receipts, as gross transport (mainly shipping) receipts dropped by 7.9%. Net travel receipts also declined (by €26 million), as both non-residents’ travel spending in Greece and residents’ travel spending abroad decreased year-on-year (by 13% and 18.5%, respectively). The income account deficit rose by €12 million, chiefly owing to slightly higher net interest, dividend and profit payments. Finally, the current transfers balance showed a surplus of €89 million, down by €221 million year-on-year, mainly as a result of a drop in net EU transfers to general government. (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 2009, the current account deficit narrowed by €8.1 billion or 23.3% and reached €26.7 billion, reflecting primarily a large decrease in the trade deficit and – to a much lesser extent – a decline in the income account deficit. At the same time, however, the surpluses of the services balance and the current transfers balance showed a big decline.
The €13.3 billion drop in the overall trade deficit is attributable to decreases of €7.4 billion, €4.6 billion and €1.3 billion 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 €9.9 billion or 24.0%, i.e. much more than export receipts, which declined by €2.5 billion or 17.8%.
The €4.6 billion contraction of the surplus of the services balance mainly reflects lower net transport and travel receipts. Gross transport receipts (chiefly from merchant shipping) fell considerably (by 29.4%); as a result, net transport receipts dropped by €3.4 billion. Moreover, travel spending by non-residents in Greece decreased by 10.9%, while travel spending by residents abroad declined by 7.9%; as a result, net travel receipts fell by €1.1 billion. Finally, net payments for “other” services grew by €121 million.
The income account deficit dropped by €840 million in comparison with 2008, because net interest, dividend and profit payments decreased as a result of international and domestic money and capital market developments. Finally, the surplus of the current transfers balance shrank by €1.5 billion as a result of declines in, mainly, EU transfers to general government and, secondarily, net receipts of the other sectors.
Capital transfers balance
In December 2009, the capital transfers balance showed a surplus of €54 million, down by €90 million 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 2009, the capital transfers balance showed a surplus of €2 billion, compared with €4.1 billion in 2008. This chiefly reflects a decline in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3.3 billion, compared with €6.9 billion in 2008.
Combined current account and capital transfers balance
The deficit of the combined current account and capital transfers balance (which reflects the economy’s external financing requirements) came to €3.1 billion in December 2009, compared with €3 billion in December 2008. In 2009, this deficit reached €24.7 billion, compared with €30.7 billion in 2008, i.e. it dropped by 19.6%.
Financial account balance
In December 2009, residents’ direct investment abroad recorded a net outflow of €318 million. The most important transactions concerned on the one hand a €169 million outflow for the participation of Cosmote Mobile Telecommunications in the capital increase of Cosmoholding Cyprus (Cyprus) and, on the other hand, a €42 million outflow for the acquisition of the Austrian company Casino Austria International Holding by the Greek company Club Hotel Loutraki Casino S.A. Non-residents’ direct investment in Greece recorded a net inflow of €74 million, without any remarkable transactions.
Under portfolio investment, a net outflow of €5.1 billion was recorded, reflecting both a €4.0 billion decrease (outflow) in non-residents’ investment in Greek government bonds and Treasury bills and a €0.3 billion decline (outflow) in non-residents’ purchases of shares of Greek firms. An outflow was also recorded due to increases of €0.6 billion and €0.1 billion in residents’ investment in foreign bonds/Treasury bills and financial derivatives, respectively.
Under “other” investment, a net inflow of €7.8 billion was recorded, which is attributable to both a €7.9 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece and a €0.4 billion decrease (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad. Also, there was a €0.2 billion rise (outflow) in loans granted by residents to non-residents and a €0.3 billion decline (outflow) in the outstanding balance of loans granted by non-residents to the public and the private sector.
In 2009, direct investment showed a net inflow of €1.1 billion. Specifically, net inflows of non-residents’ funds for direct investment in Greece came to €2.4 billion (compared with €3.1 billion in 2008) and mainly concerned an increase in the participation of foreign investors in the share capital of Emporiki Bank and the Hellenic Telecommunications Organisation (OTE), while net outflows of residents’ funds for direct investment abroad reached €1.3 billion (compared with €1.6 billion in 2008).
Also, in 2009 a net inflow of €27.1 billion was recorded under portfolio investment. This mainly reflects inflows due to non-residents’ purchases of Greek government bonds and Treasury bills (of €31.1 billion) and shares of Greek firms (€0.5 billion). At the same time, an outflow was observed due to increases of €3.0 billion, €0.7 billion and €0.9 billion in residents’ investment in foreign bonds/Treasury bills, shares and financial derivatives, respectively.
Finally, under “other” investment, a net outflow of €3.6 billion reflects a €23.4 billion increase in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, which was largely offset by a €15.6 billion rise in non-resident credit institutions’ and institutional investors’ corresponding holdings in Greece, as well as a €4.6 billion inflow for loans granted by non-residents to both the public and the private sector.
At end-December 2009, Greece’s reserve assets stood at €3.9 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 January 2010 will be released on 19 March 2010.
Balance of payments (EUR millions - provisional)