Monthly developments in September 2001 and net international investment position as at end-2000

During the first three quarters of 2001, the cumulated current account deficit declined to EUR 23.1 billion, compared with a deficit of EUR 49.0 billion for the same period last year. This largely reflects an increase of EUR 31.4 billion in the cumulated goods surplus (from EUR 8.5 billion to EUR 39.9 billion), along with a shift in the services item from a deficit of EUR 1.8 billion to a surplus of EUR 2.0 billion, which was only partially offset by an increase of EUR 9.6 billion in the income deficit (from EUR 23.5 billion to EUR 33.1 billion). Meanwhile, the deficit for current transfers remained virtually unchanged. The rising cumulated goods surplus is explained by the faster growth of export values (9.2%) than of imports (4.8%). In the financial account, combined direct and portfolio investment recorded large net inflows of EUR 29.9 billion in September 2001, the second highest net inflow in the euro area financial account since 1999. These inflows were due to large net inflows in portfolio investment (EUR 43.0 billion) which more than offset net outflows in direct investment (EUR 13.1 billion). The net inflows of EUR 43.0 billion in portfolio investment in September were mainly due to net inflows in equity portfolio investment of EUR 28.3 billion. Investment in euro area debt instruments registered net inflows of EUR 14.7 billion, which reflected net inflows of EUR 16.6 billion in bonds and notes. By contrast, investment in money market instruments recorded net outflows of EUR 1.9 billion. Financial derivatives registered a net outflow of EUR 1.0 billion and the other investment account of EUR 56.7 billion in September 2001. Reserve assets increased by EUR 1.6 billion (excluding valuation effects), whereas errors and omissions were a positive EUR 30.8 billion.

The current account registered a deficit of EUR 1.3 billion in September 2001, compared with a deficit of EUR 3.4 billion in September 2000. The decline in the deficit was mainly due to an increase in the goods surplus (from EUR 0.7 billion to EUR 5.0 billion), combined with a decrease in the income deficit (from EUR 1.8 billion to EUR 0.7 billion), while the services account shifted from a surplus of EUR 0.3 billion to a deficit of EUR 0.9 billion and the deficit for current transfers increased from EUR 2.6 billion to EUR 4.7 billion. Seasonally adjusted data show that the goods surplus started to increase from January 2001 onwards, owing primarily to a decline in import values (corresponding to a fall in oil prices over this period), while export values remained virtually flat, largely on account of weak foreign demand. These net outflows in direct investment were mostly accounted for by net outflows in the category of "other capital", mostly intercompany loans (EUR 11.7 billion). By contrast, equity direct investment registered modest net outflows of EUR 1.4 billion. Combined net outflows in direct and portfolio investment were lower in the first nine months of 2001 (EUR 51.3 billion) than during the same period in 2000 (EUR 87.5 billion). For the first time since the inception of the euro area in 1999, the assets side of portfolio investment switched to net inflows (EUR 27.1 billion) in September 2001, reflecting a repatriation of assets, perhaps influenced by the events of 11 September in the United States. These inflows were accounted for by net inflows on the assets side of equity portfolio investment (EUR 13.8 billion) and of investment in debt instruments (EUR 13.2 billion). There was no significant change in non-residents' investment in the euro area as the liabilities side of direct investment (EUR 6.0 billion) and portfolio investment (EUR 15.9 billion) continued to register net inflows in September 2001.

Euro area net international investment position as at end-2000

The euro area international investment position as at end-2000 (calculated for the Euro 12, see Table 3) recorded net liabilities of EUR 152.1 billion, as compared with EUR 116.7 billion at the end of 1999. The increase in the net liabilities of the international investment position by EUR 35.4 billion between 1999 and 2000 is primarily explained by the increase of EUR 187.3 billion in net liabilities in "other investment", which was only partially offset by an increase in the positive net direct investment position of EUR 68.4 billion and an improvement of the net portfolio debtor position of EUR 77.4 billion.

The international investment position of the euro area vis-à-vis the rest of the world comprises the net external position in terms of amounts outstanding in direct and portfolio investment, financial derivatives, other investment and reserve assets, thereby complementing the b.o.p. statistics, which record flows of assets and liabilities in the financial account. The changes in the international investment position between year-ends are partly explained by the balance of payments flows of the intervening year. In addition, the stock data also reflect valuation effects arising from changes in asset prices and exchange rates, and other changes not related to flows.

Note on balance of payments and international investment position statistics produced by the Eurosystem

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Annexes

The methodology used was developed in close co-operation with the European Commission (Eurostat), which publishes the Balance of Payments for the European Union (   ). The ECB compiles balance of payments statistics on the basis of the data on extra-euro area transactions reported by euro area countries. The euro area international investment position statistics are compiled on a net basis by aggregating national data. The first release is based on preliminary data. The results for September 2001 will also be published in the December 2001 issue of the . A detailed methodological note is available on the ECB's website.

Annex 1 Annex 2 Annex 3

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- Monthly balance of payments of the euro area for 2000 and 2001; - Euro area current account - seasonally adjusted data (Euro 12); - Euro area international investment position as at end-2000. Reproduction is permitted provided that the source is acknowledged