Press Releases

Balance of payments: September 2011

22/11/2011 - Press Releases

Current account balance

In September 2011, the current account balance showed a deficit of €1,097 million, down by €154 million year-on-year.

The trade deficit fell by €234 million owing to decreases in both the non-oil trade deficit and the net oil import bill. More specifically, receipts from exports of goods excluding oil and ships increased by €297 million or 28.3%, but at the same time the corresponding import bill also rose (by €186 million or 8.4%). The net import bill for oil and ships decreased by €78 million and €45 million, respectively.

The surplus of the services balance grew by €262 million because mainly net travel and secondarily net transport receipts rose, with the “other” services balance showing a small surplus (compared with a deficit in September 2010). In more detail, travel spending in Greece by non-residents grew by 7.1% in September, while travel spending abroad by residents of Greece declined by 11.6%. Gross transport receipts (chiefly from merchant shipping) fell by 5.8%, but the corresponding payments also ddecreased, by 14.1%; as a result, net receipts grew by 3.3%.

The income account deficit rose considerably (by €342 million), mainly as a result of higher net payments for interest, dividends and profits.

Finally, the current transfers balance showed almost the same deficit as in September 2010. (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 January-September 2011 period, the current account deficit fell by €1.4 billion or 8.6% year-on-year, to €15 billion. This chiefly reflects a significant decline of €2.65 billion in the non-oil trade deficit and a rise of €0.8 billion in the surplus of the services balance, which more than offset a large increase in the net oil import bill and a widening of the income account deficit. The current transfers balance remained virtually unchanged.

In more detail, the trade deficit shrank by €1.3 billion, as a result of a €2.5 billion decrease in the trade deficit excluding oil and ships and a €152 million fall in net payments for purchases of ships. By contrast, the net oil import bill rose by €1.4 billion. Most importantly, receipts from exports of goods excluding oil and ships grew strongly (by 18.8%); however, the corresponding import bill showed a relatively moderate decline (of only 4.6%).

The increase in the surplus of the services balance reflects higher net travel receipts and lower net payments for “other” services, which more than offset a contraction in net transport receipts. More specifically, travel spending in Greece by non-residents grew markedly (by 9.5%) year-on-year, while travel spending abroad by residents of Greece rose by 5.0%. According to data from the Bank of Greece’s border survey, in the January-September 2011 period non-residents’ arrivals rose at an average annual rate of 10.4%. During the same period, gross transport receipts (chiefly from merchant shipping) fell by 10.3% and the corresponding payments decreased by 10.1%; as a result, net receipts shrank by €588 million.

The income account deficit rose by €671 million year-on-year, mainly due to higher net payments for interest, dividends and profits (up by 10%).

Finally, the current transfers balance showed a surplus of €687 million, almost unchanged year-on-year (€690 million). This development is due to the fact that net transfer receipts of general government (mainly from the EU) rose by €111 million, while net transfer payments of other sectors (chiefly emigrants’ remittances) rose by €114 million.

Capital transfers balance

In September 2011, the capital transfers balance showed a surplus of €8 million, compared with a deficit of €18 million in September 2010. (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 January-September 2011 period, the capital transfers balance showed a surplus of €1.2 billion, compared with €769 million in the corresponding period of 2010. This mostly reflects a rise in net EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €1.8 billion, up by €380 million year-on-year, reflecting the above-mentioned positive development in capital transfers from the EU.

Combined current account and capital transfers balance

In September 2011, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €1,089 million, compared with €1,269 million in September 2010. In the January-September 2011 period, this balance showed a deficit of €13.9 billion, compared with €15.7 billion in the corresponding period of 2010 (down by 11.4%).

Financial account balance

In September 2011, non-residents’ direct investment in Greece showed a net outflow (disinvestment) of €142 million, without any remarkable transactions. Residents’ direct investment abroad recorded a net outflow of €52 million, also without any remarkable transactions.

Under portfolio investment, a net outflow of €3.4 billion was recorded, reflecting a €4.0 billion increase in residents’ holdings of foreign bonds and Treasury bills. This was partly offset by a €691 billion increase in non-residents’ holdings of Greek bonds and Treasury bills (inflow).

Under “other” investment, a net inflow of €5.2 billion was recorded, which mainly reflects a €6.7 billion net increase in non-residents’ deposit and repo holdings in Greece (inflow). By contrast, a net decline of €1.5 billion was recorded in the outstanding debt of the public and the private sector to non-residents (outflow).

In the January-September 2011 period, direct investment showed a net outflow of €1.6 billion (compared with a net outflow of €0.4 billion in the corresponding period of 2010). Specifically, net outflows of residents’ funds for direct investment abroad reached €1.2 billion, while non-residents’ investment in Greece showed a net outflow (disinvestment) of €0.4 billion.

A net outflow of €14.6 billion was observed under portfolio investment (compared with a net outflow of €18.3 billion in the corresponding period of 2010). In more detail, an outflow was recorded due to, mainly, a decrease of €19.9 billion in non-residents’ holdings of Greek government bonds and Treasury bills and, secondarily, a €624 million increase in residents’ investment in foreign derivatives and a €213 million decline in non-residents’ holdings of shares of Greek firms. These developments were only partly offset by a €6.0 billion decline in resident institutional investors’ holdings of foreign bonds and Treasury bills and a €78 million decrease in residents’ holdings of shares of foreign firms.

Under “other” investment, a net inflow of €31.6 billion (compared with a net inflow of €35.0 billion in the corresponding period of 2010) is mainly attributable to a €29.9 billion increase in the net outstanding debt of the public and the private sector to non-residents. In particular, net general government borrowing came to €31.7 billion and gross general government borrowing under the support mechanism for the Greek economy came to €33.4 billion. There was also a €3.9 billion increase in non-residents’ deposit and repo holdings in Greece (inflow).These developments were partly offset by a €1.9 billion rise in residents’ deposit and repo holdings abroad.

At end-September 2011, Greece’s reserve assets stood at €5.4 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. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

Note: Balance of payments data for October 2011 will be released on 20 December 2011.

Related link: Balance of payments: September 2011 table

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