Balance of Payments: May 2023
21/07/2023 - Press Releases
- In May 2023, the current account deficit decreased year-on-year, due to an improvement in the balance of goods, services and the secondary income account, while the primary income account deteriorated.
- In January-May 2023, the current account deficit decreased relative to the same period of 2022, chiefly owing to an improvement in the balance of goods and in the secondary income account, and to a lesser extent in the balance of services, which was offset to a degree by a worsening in the primary income account.
Current account
In May 2023, the current account deficit fell by €431.3 million year-on-year to stand at €1.6 billion.
A reduction in the goods deficit is accounted for by a larger drop in imports than exports in absolute terms. Exports dropped by 15.9% at current prices (-4.6% at constant prices) and imports fell by 12.8% at current prices (-2.9% at constant prices). More specifically, non-oil exports of goods edged up by 0.7% at current prices (-1.9% at constant prices), whereas non-oil imports of goods dropped by 4.0% (-5.0% at constant prices).
An increase in the services surplus is due to an improvement in the balance of travel services, while the transport balance, and to a lesser extent the other services balance, deteriorated. Non-residents’ arrivals rose by 13.9% and the relevant receipts increased by 24.8% compared with May 2022.
The primary income account registered a deficit, against a surplus in May 2022, largely on the back of higher interest, dividend and profit payments. The surplus of the secondary income account decreased compared with May 2022, reflecting mainly a fall in general government net receipts.
In January-May 2023, the current account deficit decreased by €3.5 billion year-on-year to stand at €7.2 billion.
A reduction in the goods deficit is a combined result of an increase in exports and a decrease in imports. Exports grew by 5.5% at current prices (5.5% at constant prices), whereas imports fell by 4.5% (-0.9% at constant prices). Specifically, non-oil exports of goods rose by 6.7% at current prices, while the corresponding imports decreased slightly by 1.2% (-0.2% and -4.1% at constant prices, respectively).
An increase in the services surplus is attributed primarily to an improvement in the balance of travel services and, to a lesser extent, to an improvement in the other services balance, partly offset by a deterioration in the transport balance. Non-residents’ arrivals grew by 32.9% and the relevant receipts increased by 30.7% year-on-year.
The surplus of the primary income account decreased in comparison with the corresponding period of 2022, reflecting an increase in net interest, dividend and profit payments, partly offset by an increase in net receipts from other primary income. The surplus of the secondary income account increased relative to the same period of 2022, mainly because net receipts were recorded in the general government balance instead of net payments.
Capital account
In May 2023, the capital account showed a small deficit of €5.6 million, against a surplus in May 2022, mainly due to a decrease in general government net receipts.
In January-May 2023, the capital account surplus increased year-on-year and amounted to €1.9 billion, mainly due to the recording of net receipts, instead of net payments, in the οther sectors than general government balance and, to a lesser extent, due to an increase in general government net receipts.
Combined current and capital account
In May 2023, the deficit of the combined current and capital account (corresponding to the economy’s external financing requirements) decreased to stand at €1.7 billion.
In January-May 2023, the deficit of the combined current and capital account declined significantly year-on-year and amounted to €5.3 billion.
Financial account
In May 2023, under direct investment, residents’ external assets increased by €338.5 million and residents’ external liabilities rose by €500.5 million, without any remarkable transactions.
Under portfolio investment, an increase in residents’ external assets is mainly due to a rise of €1.9 billion in residents’ holdings of foreign bonds and Treasury bills. A decline in their liabilities is due to a decrease of €469.0 million in non-residents’ holdings of Greek bonds and Treasury bills.
Under other investment, residents’ external assets fell mainly due to a decrease of €1.4 billion in residents’ deposit and repo holdings abroad, partly offset by a €350.0 million statistical adjustment associated with the issuance of banknotes and by a rise of €157.6 million in loans extended to non-residents. A rise in residents’ external liabilities reflects chiefly an increase of €2.4 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included) and, to a lesser extent, a €350 million statistical adjustment related to the issuance of banknotes, as well as a €255.9 million rise in outstanding debt to non-residents.
In January-May 2023, under direct investment, residents’ external assets increased by €703.4 million and residents’ external liabilities, which represent non-residents’ direct investment in Greece, rose by €1.6 billion.
Under portfolio investment, a rise in residents’ external assets is almost exclusively due to an increase of €4.2 billion in residents’ holdings of foreign bonds and Treasury bills. An increase in their liabilities is mainly due to a rise of €2.4 billion in non-residents’ holdings of Greek bonds and Treasury bills.
Under other investment, a decline in residents’ external assets stems from a €2.6 billion decrease in residents’ deposit and repo holdings abroad, as well as from a €169.0 million drop in loans extended to non-residents by domestic financial institutions, which was partly offset by a €1.3 billion statistical adjustment associated with the issuance of banknotes. An increase in their liabilities reflects a rise of €2.9 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included), as well as a €1.3 billion statistical adjustment associated with the issuance of banknotes.
At end-May 2023, Greece’s reserve assets stood at €12.5 billion, compared with €10.8 billion at end-May 2022.
Note: Balance of Payments data for June 2023 will be released on 21 August 2023.