Balance of Payments: March 2015
22/05/2015 - Press Releases
Balance of Payments – March 2015 (1)
Current account balance
In March 2015, the current account balance showed a deficit of €404 million, up by €316 million year-on-year. This development is attributable to a decline in the surplus of the services balance and to a deterioration in the primary and the secondary income accounts. The above developments were offset to some extent by an improvement in the balance of goods.
The deficit of the balance of goods decreased by €281 million year-on-year, mainly on account of the lower net oil import bill, which reflects the fall in oil prices. In addition, net payments for purchases of ships also declined. By contrast, the deficit of the balance of goods excluding oil and ships registered an increase, despite a 12.8% rise in export receipts, given that the corresponding imports grew more.
The surplus of the services balance shrank, owing to lower net receipts from construction and financial services, as well as from sea transport services. The surplus of the travel services balance rose slightly, as a result of an increase of 34.3% in non-residents’ arrivals in March and a 13.3% rise in the corresponding receipts, which offset an increase in travel spending abroad by residents.
The primary income account showed a surplus of €40 million, down by €336 million year-on-year, mainly on account of lower net other primary income and higher net interest, dividend and profit payments. The secondary income account showed a deficit of €50 million, against a surplus of €38 million in March 2014, chiefly due to the fact that the small surplus of general government vis-à-vis the EU turned into a deficit.
In the first quarter of 2015, the current account balance showed a deficit of €2.2 billion, up by €1 billion year-on-year. This increase is attributable to a deterioration in the primary and the secondary income accounts as well as in the services balance. By contrast, the balance of goods showed an improvement, which more than offset the decline in the surplus of the services balance, resulting in an improvement in the overall balance of goods and services.
The deficit of the balance of goods decreased by €359 million, due to a drop in the net oil import bill, as a result of the fall in oil prices, and in net payments for purchases of ships. By contrast, the deficit of the balance of goods excluding oil and ships increased. It should be noted that receipts from exports of goods excluding oil and ships registered a 2.4% rise, as did the corresponding import bill, which grew by 9.3%.
The surplus of the services balance shrank, as the decline in net transport and other services receipts was only partly offset by a rise in net travel receipts. In the first quarter of 2015, total non-residents’ arrivals increased by 45.6% year-on-year, but the corresponding receipts grew by a mere 12.8%.
In the first quarter of 2015, the surplus of the primary income account narrowed, mainly on account of higher net payments related to investment income (interest, dividends, and profits) and lower net other primary income. Moreover, the secondary income account recorded a deficit, against a surplus in the same period of 2014.
Capital account balance
In March 2015, the capital account surplus increased by €315 million year-on-year, reflecting higher net capital transfers from the EU to general government. In the first quarter of 2015, the capital account showed a surplus of €480 million, down by €981 million year-on-year.
Combined current and capital account balance
In March 2015, the combined current and capital account balance (corresponding to the economy’s external financing requirements) showed a deficit of €83 million, almost unchanged year-on-year. In the first quarter of 2015, a deficit of €1.7 billion was recorded, against a surplus of €308 million in the same period of 2014.
Financial account balance
In March 2015, residents’ net assets from direct investment abroad decreased by €24 million. The corresponding liabilities, that represent non-residents’ direct investment in Greece, registered a net decrease of €69 million, mainly as a result of two transactions: an outflow of €118 million due to a reduction in the participation of Capital Group Companies Inc (USA) in Eurobank’s share capital and an inflow of €61 million due to an increase in the participation of Fairfax Financial Holdings Limited (Canada) in Eurobank’s share capital.
Under portfolio investment, a net increase of €1.6 billion in residents’ external assets reflects mainly a rise of €789 million in residents’ holdings of foreign bonds and Treasury bills, as well as an increase of €740 million in residents’ investment in shares of foreign firms. Conversely, residents’ net external liabilities declined by €322 million.
Under other investment, a net increase of €1.8 billion in assets was recorded, which reflects mainly a rise of €1.0 billion in residents’ deposit and repo holdings abroad. The net increase of €3.9 billion in liabilities reflects principally a net rise of €5.4 billion in non-residents’ deposit and repo holdings in Greece and a net decline in the outstanding debt of the public and the private sector to non-residents, of which €1.6 billion concern principal payments to the IMF under the support mechanism.
In the first quarter of 2015, residents’ net assets from direct investment abroad rose by €52 million, while the corresponding liabilities that represent non-residents’ direct investment in Greece declined by €64 million.
Under portfolio investment, a net decrease of €6.7 billion in residents’ external assets is mainly due to a drop of €11.4 billion in residents’ holdings of foreign bonds and Treasury bills, which was partly offset by a rise of €4.6 billion in residents’ investment in shares of foreign firms. Moreover, residents’ net external liabilities fell by €2.5 billion, mainly on account of a decline in non-residents’ holdings of Greek government bonds and Treasury bills, as well as in shares of Greek firms.
Finally, under other investment, the net increase of €14.3 billion in assets primarily reflects the statistical adjustment that relates to the issue of banknotes (2) and a rise in residents’ deposit and repo holdings abroad. On the other hand, an increase of €12.2 billion in liabilities is attributable to both a rise in non-residents’ deposit and repo holdings in Greece and the issue of banknotes above Greece’s key for subscription to the Eurosystem. These developments were considerably offset by an increase in residents’ outstanding debt.
At end-March 2015, Greece’s reserve assets stood at €6.05 billion, compared with €5.5 billion at end-March 2014.
Note: Balance of payments data for April 2015 will be released on 22 June 2015.
Related link: Balance of payments: March 2015 - Table
(1) It should be noted that, as from reference month January 2015, the presentation of the balance of payments is based on the Balance of Payments Manual 6th edition (BPM6). For more information on the transition to the new BMP6 methodology, see the relevant Press Release published by the Bank of Greece on 23 March 2015.
(2) It should be noted that, as from January 2015, under other investment, the statistical adjustment that relates to the issue of (euro) banknotes above the key for subscription to the European Central Bank’s capital is also recorded under liabilities, representing liabilities of the Bank of Greece vis-à-vis the Eurosystem. This entry is offset by an entry of the same amount under assets, representing residents’ assets vis-à-vis the Eurosystem.