Balance of payments: NOVEMBER 2010
20/01/2011 - Press Releases
Current account balance
In November 2010, the current account deficit reached €2,572 million, down by €153 million or 5.6% year-on-year. This improvement is attributable to a rise in the surplus of the services balance and a decrease in the trade deficit. These developments were partly offset by an increase in the income account deficit, while there was also a marginal increase in the deficit of the current transfers balance.
The drop in the trade deficit was accounted for by a decrease of €349 million in the trade deficit excluding oil and ships, while the net import bill for oil and ships rose by €234 million and €44 million, respectively. Specifically, exports of goods excluding oil and ships rose by 6.7% year-on-year. It should be noted that exports of goods excluding oil and ships had shown a negative annual rate of change up to June, before turning marginally positive in the two months that followed and rising visibly in September. This trend seems to continue in November, after exports decreased marginally in October, probably affected with a lag by the recording, at the transactions level, of the negative impact from the strike of truck owners in September. The import bill for goods excluding oil and ships dropped by 11.4% year-on-year.
The surplus of the services balance rose by €171 million year-on-year as a result of higher net transport and travel receipts (up by €74 million and €21 million, respectively). Moreover, net payments for “other” services fell by €76 million. It should be noted that travel receipts declined by only 1.6% year-on-year, while travel payments fell visibly (by 12.6%). By contrast, transport receipts (mainly from merchant shipping) continued to grow strongly in November (by 14.3%).
The income account deficit rose by €80 million, almost exclusively due to higher net interest, dividend and profit payments.
Finally, the deficit of the current transfers balance increased marginally (by €8 million) year-on-year, chiefly as a result of a rise in other sectors’ payments (emigrants’ remittances), while general government net transfer payments to the EU remained roughly at last year’s levels, as gross receipts dropped by €115 million, while gross payments fell by €118 million. (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-November 2010 period, the current account deficit fell by €588 million or 2.6% year-on-year. The decrease, on an annual basis, was first observed in July 2010. This development during the first eleven months of 2010 reflects mainly a fall in the trade deficit and a rise in the surplus of the services balance. By contrast, during the same period, the surplus of the current transfers balance narrowed considerably, while the income account deficit rose slightly.
The €1,165 million drop in the overall trade deficit mainly stemmed from a decrease of €3.2 billion in the trade deficit excluding oil and ships. Specifically, the import bill for goods excluding oil and ships fell by €3.3 billion (11.7%), while the corresponding export receipts declined by only €148 million (1.4%). By contrast, the net oil import bill rose by €1.6 billion or 23.5%, while net payments for purchases of ships grew by €356 million or 11.8%.
The €565 million increase in the surplus of the services balance mainly reflects higher net transport receipts and, secondarily, lower net payments for other services. Gross transport receipts (chiefly from merchant shipping) showed an increase of 15.4% and – despite a 16.7% rise in the corresponding payments – net transport receipts grew by €819 million. By contrast, net travel receipts fell by €559 million, as travel spending in Greece by non-residents dropped by €748 million or 7.3%, while travel spending abroad by residents declined by €189 million or 8.5%. Finally, net payments for “other” services decreased by €305 million.
The income account deficit widened by €136 million or 1.7% in comparison with the corresponding period of 2009, reflecting higher net payments both for interest, dividends and profits, as well as for fees.
Finally, the surplus of the current transfers balance fell by €1 billion year-on-year. This decline mainly reflects the fact that the “other sectors” (emigrants’ remittances etc.) showed net transfer payments of €62 million, against net receipts of €423 million in the corresponding period in 2009, while general government net transfer receipts (mainly from the EU) dropped by €521 million (about 2/3 of this decrease was attributable to lower receipts and 1/3 to higher payments).
Capital transfers balance
In November 2010, the capital transfers balance showed a surplus of €130 million, compared with a surplus of €429 million in November 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 January-November 2010 period, the capital transfers balance showed a surplus of €881 million, compared with €2 billion in the corresponding period of 2009. This mostly reflects a decline in EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €1.1 billion, compared with a surplus of €3.2 billion in the corresponding period of 2009.
Combined current account and capital transfers balance
In November 2010, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €2.4 billion, compared with €2.3 billion in November 2009. In the January-November 2010 period, the deficit of the combined current account and capital transfers balance came to €21.3 billion, compared with €20.8 billion in the corresponding period of 2009 (up by 2.4%).
Financial account balance
In November 2010, non-residents’ direct investment in Greece showed a net inflow of €331 million. The most important transaction concerned a €340 million inflow for the participation of SOCIETE GENERALE (France) in the capital increase of Geniki Bank. Residents’ direct investment abroad recorded a net outflow of €76 million, without any remarkable transaction.
Under portfolio investment, a net outflow of €3.5 billion was recorded, reflecting both a €2.0 billion decrease in non-residents’ investment in bonds issued by residents and in Treasury bills and a €1.5 billion hike in residents’ investment in foreign bonds and Treasury bills (outflow).
Under “other” investment, a net inflow of €5.5 billion was recorded, which mainly reflects a €3.5 billion increase in non-residents’ deposit and repo holdings in Greece, as well as a €2.1 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). Moreover, there was a €28 million increase in loans to non-residents (outflow), as well as a €51 million drop in the outstanding debt obligations of the public and the private sector to non-residents (outflow).
In the January-November 2010 period, direct investment showed a net inflow of €709 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece reached €1.6 billion (compared with a net inflow of €1.7 billion in the corresponding period of 2009), while an outflow of €0.8 billion was recorded under residents’ direct investment abroad (compared with €1.1 billion in the corresponding period of 2009).
During the same period, a net outflow of €24.1 billion was observed under portfolio investment (against a net inflow of €32.5 billion in the corresponding period of 2009). Specifically, outflows were recorded due to decreases of €34.2 billion and €1.2 billion in non-residents’ purchases of bonds issued by residents/Treasury bills and shares of Greek firms, respectively. There was also a €1.2 billion outflow due to a rise in residents’ holdings of foreign shares. These outflows were partly offset by inflows of €12.1 billion and €0.4 billion owing to declines in resident credit institutions’ and institutional investors’ holdings of foreign bonds and financial derivatives, respectively.
Under “other” investment, a net inflow of €45.1 billion (against a net outflow of €11.5 billion in the corresponding period of 2009) is mainly attributable to general government net borrowing of €27.5 billion, as well as a €16.0 billion increase in non-residents’ deposit and repo holdings in Greece (inflow). There was also a small decrease (inflow) of €0.5 billion in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.
At end-November 2010, Greece’s reserve assets stood at €4.4 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. 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: NOVEMBER 2010 - Table
Note: Balance of payments data for December 2010 will be released on 18 February 2011.