Balance of payments: May 2014
21/07/2014 - Press Releases
Current account balance
In May 2014 the current account balance showed a deficit of €246 million, against a €70 million surplus in May 2013, as a result of a rise in the deficits of mainly the trade balance and also the income account balance, as well as a year-on-year shift of the current transfers balance from surplus to deficit. The abovementioned developments were partly offset by an increase in the surplus of the services balance.
The trade deficit increased by €345 million year-on-year, owing to the higher net import bill primarily for oil and secondarily for ships. By contrast, the trade balance excluding oil and ships did not show any remarkable change, although export receipts rose faster than the corresponding import payments.
The surplus of the services balance increased by €190 million year-on-year, mainly as a result of the higher surplus of the “other” services balance, which largely reflects construction services. The travel services balance improved slightly, as receipts did not rise notably in May 2014, despite a 12.6% increase in non-residents’ arrivals. The slightly increased surplus in the transport services balance reflects almost entirely a rise in the surplus of the sea transport services balance.
In the January-May 2014 period, the current account deficit came to €2.5 billion, down by €832 million year-on-year. This development is attributable to improvements in the services, income account and current transfers balances, which more than offset the higher trade deficit.
In more detail, as regards the trade deficit, increased net payments for purchases mainly of ships, which more than doubled, and also the higher net oil import bill offset a contraction in the deficit of the balance of goods excluding oil and ships. This contraction is attributable to the lower import bill, since receipts from exports of goods excluding oil and ships remained almost unchanged. As a result, the trade deficit rose by €565 million.
The €834 million increase in the surplus of the services balance mainly reflects higher net transport receipts and, to a lesser extent, higher net receipts from travel and other services. As regards travel spending by non-residents in Greece, a year-on-year increase of 10.6% was recorded, reflecting a 17% rise in non-residents’ arrivals, while travel spending by residents abroad rose by 16.3%.
The income account deficit fell by €245 million, mainly as a result of lower net interest payments.
Finally, the current transfers balance showed a surplus of €2 billion, up by €318 million year-on-year. This development is attributable to a rise in general government transfer receipts (mainly from the EU).
Capital transfers balance
In May 2014, the capital transfers balance did not show any considerable change. In the January-May 2014 period, the surplus of the capital transfers balance came to €1.4 billion, compared with €1.1 billion over the same period in 2013.
The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3.4 billion in the January-May 2014 period, up by €633 million year-on-year.
Combined current account and capital transfers balance
In May 2014, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €259 million, against a surplus of €56 million in May 2013. In the January-May 2014 period, this balance showed a deficit of €1.05 billion, against a deficit of €2.2 billion in the same period of 2013.
Financial account balance
In May 2014, non-residents’ direct investment in Greece showed a net inflow (increase) of €653 million. The most important transaction concerned a €595 million inflow for the participation of Capital Group Companies, Inc. (United States) in the capital increase of EFG Eurobank Ergasias S.A. Residents’ direct investment abroad recorded a net outflow (increase) of €39 million, without any remarkable transactions.
Under portfolio investment, a net outflow of €358 million was recorded, as a result of a €3.1 billion decline (outflow) in holdings of Greek government bonds and Treasury bills by non-residents, and of a €1.8 billion increase (outflow) in residents’ holdings of foreign bonds and Treasury bills. These developments were largely offset by a €4.6 billion rise (inflow) in non-residents’ investment in shares of Greek firms.
Under “other” investment, a net outflow of €217 million was recorded mainly on account of a rise (outflow) in residents’ deposit and repo holdings abroad, which was partly offset by a net increase (inflow) in the outstanding debt of the public and the private sector to non-residents.
In the January-May 2014 period, non-residents’ direct investment in Greece showed a net inflow of €881 million, while residents’ direct investment abroad showed a net outflow (increase) of €258 million.
Under portfolio investment, a net inflow of €5.1 billion was recorded, mainly on account of a rise in non-residents’ holdings of shares of Greek firms. These developments were partly offset by a net increase in residents’ holdings of foreign bonds and Treasury bills, as well as of foreign financial derivatives.
Under “other” investment, a net outflow of €4.4 billion was recorded chiefly as a result of a decrease (outflow) in non-residents’ deposit and repo holdings in Greece, which was partly offset by a net rise (inflow) in the outstanding debt of the public and the private sector to non-residents.
At end-May 2014, Greece’s reserve assets stood at €5.0 billion, compared with €4.9 billion at end-May 2013.
Note: Balance of payments data for June 2014 will be released on 20 August 2014.
Related link: Balance of payments: May 2014 - Table