Balance of payments: JUNE 2010
18/08/2010 - Press Releases
Current account balance
In June 2010, the current account deficit came to €1,943 million, down by €367 million year-on-year. This improvement is mainly attributable to a decrease in the trade deficit and, secondarily, a rise in the surplus of the services balance and a drop in the deficit of the current transfers balance. These developments were partly offset by an increase in the income account deficit.
The drop in the trade deficit was accounted for by a decline of €430 million in the trade deficit excluding oil and ships, while net payments for purchases of ships and the net oil import bill rose by €113 million and €38 million, respectively.
The surplus of the services balance rose by €150 million as a result of a €291 million hike in net transport receipts, while net travel receipts fell (by €210 million) year-on-year.
The income account deficit grew by €136 million, almost exclusively due to higher net interest, dividend and profit payments.
Finally, the deficit of the current transfers balance almost halved year-on-year, mainly as a result of lower general government payments to the Community Budget. (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 first half of 2010, the current account deficit did not change considerably year- on-year, as it rose by a mere €32 million or 0.2%, to reach €14.5 billion. This reflects the fact that the fall in the surplus of the current transfers balance was offset by decreases in the trade and the income account deficits, as well as by a rise in the surplus of the services balance.
The €97 million drop in the overall trade deficit stemmed from a decrease of €1.1 billion in the trade deficit excluding oil and ships, as the relevant import bill fell by €1.4 billion (8.7%), while the corresponding export receipts declined by €276 million (4.9%). By contrast, the net oil import bill rose by €841 million or 23.4% and net payments for purchases of ships grew by €142 million or 7.7%.
The €135 million increase in the surplus of the services balance mainly reflects higher net transport receipts. Gross transport receipts (chiefly from merchant shipping) showed an increase of 14.8%, while the corresponding payments grew by 20.1%; as a result, net transport receipts rose by €304 million. By contrast, net travel receipts fell by €253 million, as travel spending by non-residents in Greece dropped by 11.9%, while travel spending by residents abroad also declined (by 10.5%). Finally, net payments for “other” services decreased by €84 million.
The income account deficit narrowed by €103 million in comparison with the first half of 2009, because net interest, dividend and profit payments fell by €130 million.
Finally, the current transfers balance showed a surplus of €1.1 billion, compared with a surplus of €1.5 billion in the same period of 2009. Four fifths (4/5) of this decline is accounted for by lower net receipts of the “other sectors” (emigrants’ remittances etc.) and 1/5 by lower net EU transfers to general government.
Capital transfers balance
In June 2010, the capital transfers balance showed a deficit of €11 million, compared with a surplus of €74 million in June 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 first half of 2010, the capital transfers balance showed a surplus of €136 million, compared with €902 million in the first half 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 €1,224 million, compared with a surplus of €2,355 million in the same period of 2009.
Combined current account and capital transfers balance
In June 2010, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €2 billion, compared with a deficit of €2.2 billion in June 2009. In the first half of 2010, the deficit of the combined current account and capital transfers balance came to €14.4 billion, compared with €13.6 billion in the same period of 2009 (up by 5.9%).
Financial account balance
In June 2010, non-residents’ direct investment in Greece recorded a net inflow of €82 million, while residents’ direct investment abroad showed a net inflow (disinvestment) of €11 million, but no important transactions were recorded.
Under portfolio investment, a net inflow of €3.8 billion was recorded, reflecting mainly a €3.3 billion increase (inflow) in non-residents’ investment in Greek government bonds and Treasury bills and a €0.6 billion decline (inflow) in residents’ holdings of foreign bonds and Treasury bills.
Under “other” investment, a net outflow of €1.8 billion was recorded, which mainly reflects a €6.7 billion decrease (outflow) in non-residents’ deposit and repo holdings in Greece, which was partly offset by a €4.9 billion decline (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.
In the first half of 2010, direct investment showed a net inflow of €892 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece reached €1,251 million, while an outflow of €360 million was recorded under residents’ direct investment abroad.
During the same period, a net outflow of €5 billion was recorded under portfolio investment. Specifically, outflows were recorded due to decreases of €12.6 billion and €1.1 billion in non-residents’ purchases of Greek government bonds/Treasury bills and shares of Greek firms, respectively. Outflows of €808 million and €317 million were also recorded owing to increases in residents’ holdings of foreign shares and financial derivatives, respectively. These outflows were only partly offset by a €9.7 billion inflow due to a decline in resident credit institutions’ and institutional investors’ holdings of foreign bonds and Treasury bills.
Under “other” investment, a net inflow of €19.1 billion is mainly attributable to general government borrowing (as mentioned in the press release for May 2010), as well as a €15.4 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece. These developments were largely offset by a €16.3 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.
At end-June 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 July 2010 will be released on 20 September 2010.