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Balance of Payments: March 2020

21/05/2020 - Press Releases

Current Account

In March 2020, the current account balance showed a deficit of €1.1 billion, down by €432 million year-on-year, due to improvements in the balance of goods and the primary and secondary income accounts. By contrast, the surplus of the services balance declined.

The deficit of the balance of goods decreased by €319 million due to an improved non-oil balance of goods and despite a decline of 5.4% in non-oil exports, as the corresponding imports fell at a much faster pace (-12%). These developments are largely attributable to the halt of economic activity worldwide as a result of the lockdown imposed in order to rein in the COVID-19 pandemic. The oil balance did not change considerably. The decline in oil imports and exports is due to a steep fall in international oil prices, while oil exports and imports, at constant prices, rose by 37% and 82%, respectively, year-on-year.

The surplus of the services balance shrank, due to a deterioration primarily in the transport balance (which is mainly attributable to a drop of 16.7% in net sea transport receipts) and secondarily in the travel and other services balances. The travel balance decreased, as non-residents’ arrivals fell by 46.8% and the corresponding receipts by 71%, given that air traffic was suspended and hotels were shut down. Residents’ travel spending abroad also fell sharply by 75.7%, without, however, fully offsetting the drop in receipts.

In the first quarter of 2020, the current account deficit improved and came to €3.5 billion, down by €201 million year-on-year, as the improved balance of goods and secondary income account more than offset the deterioration in other balances. 

The deficit of the balance of goods shrank, owing to an improving non-oil balance of goods, while the oil balance worsened. Non-oil exports of goods rose by 4.5% at current prices (5.0% at constant prices), while the corresponding imports fell by 2.5% at current prices and by 2.0% at constant prices. The decline in oil exports and imports is attributable to lower oil prices, while oil exports and imports, at constant prices, rose by 5.1% and 15.4%, respectively.

The surplus of the services balance declined, as a result of a deterioration mainly in the transport balance, as well as in the other services balance. The travel balance improved in the first quarter of 2020 year-on-year. Non-residents’ arrivals and the corresponding receipts fell by 5.6% and 17.1%, respectively, due to the developments in March.

Lastly, the primary and the secondary income accounts worsened by €38.4 million and improved by €201.4 million, respectively.

 Capital account

 In March 2020, the capital account showed a surplus of €116.4 million, against a deficit of €67 million year-on-year, primarily owing to an increase in general government receipts. In the first quarter of 2020, the capital account posted a surplus of €256.5 million, up by €70 million year-on-year.

Combined current and capital account

In March 2020, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a deficit of €990 million, down by €615 million year-on-year. In the first quarter of 2020, the deficit stood at €3.3 billion, down by €271 million year-on-year.

Financial account

In March 2020, no remarkable transactions were recorded under direct investment.

Under portfolio investment, an increase in residents’ external assets was registered, mainly due to a rise (of €3.3 billion) in residents’ holdings of foreign bonds and Treasury bills, which was associated with the Bank of Greece asset purchases under ECB programmes, mainly the PSPP (Public Sector Purchase Programme). The decrease in residents’ external liabilities is mainly due to a decline (of €1.3 billion) in non-residents’ holdings of bonds and Treasury bills.

Under other investment, the increase in residents’ external assets mainly reflects a rise of €691 million in domestic credit institutions’, institutional investors’ and corporations’ deposit and repo holdings abroad. The €7.4 billion rise in external liabilities is mainly associated with a rise in residents’ debt liabilities vis-à-vis non-residents (chiefly due to an increase in external debt liabilities of the non-financial sector stemming from a reclassification of liabilities related to a systemic bank’s securitised loans, which did not affect Greece’s International Investment Position), as well as with TARGET account transactions.

In the first quarter of 2020, under direct investment, residents’ external liabilities (stemming from non-residents’ direct investment in Greece) rose by €885 million.

Under portfolio investment, an increase in residents’ external assets was recorded, stemming from a rise in residents’ holdings of foreign bonds and Treasury bills (€3.5 billion), which, as mentioned above, was associated with the Bank of Greece asset purchases under ECB programmes, mainly the PSPP (Public Sector Purchase Programme). The decrease in residents’ external liabilities is mainly due to a decline of €1.2 billion in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, the increase in residents’ external assets is mostly attributable to a rise (of €1.4 billion) in residents’ deposit and repo holdings abroad and to the statistical adjustment related to the issue of banknotes (€1.4 billion). The increase in residents’ external liabilities mainly reflects a rise in TARGET liabilities.

At end-March 2020, Greece’s reserve assets stood at €8.5 billion, compared with €6.5 billion at end-March 2019. 
 

Note: Balance of payments data for April 2020 will be released on 19 June 2020.

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