Monthly developments in March 2003 and revisions for February 2003

In the first quarter of 2003, the current account recorded a deficit of EUR 2.1 billion, compared with a surplus of EUR 12 billion in the first quarter of 2002. This reflected a decline in the goods surplus (from EUR 26.7 billion in the first quarter of 2002 to EUR 14.3 billion in the first quarter of 2003), and an increase in the income deficit (from EUR 7.4 billion to EUR 13.8 billion). The shift of the services balance from a deficit (EUR 4.7 billion) to a small surplus (EUR 0.3 billion) partly offset these developments. The change in the goods balance was due to a 4.2% increase in the value of goods imports, related in part to the significant rise in oil prices over this period, combined with a decrease of 1.1% in the value of exports. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 12.7 billion in March 2003, which stemmed from the net inflows in portfolio investment (EUR 20.7 billion). The net outflows recorded in direct investment (EUR 8 billion) resulted mainly from other capital (mostly inter-company loans) invested abroad. The other investment account recorded net outflows of EUR 15 billion in March 2003. This development was mostly driven by net outflows from the money-holding sector ("other sectors") of EUR 10.8 billion, and from the MFI sector of EUR 8.0 billion. Template on international reserves and foreign currency liquidity

Data revisions

The revisions of the financial account mostly affected portfolio investment since 2001, as one Member State reported substantial changes in debt instrument-related liabilities. Net inflows in euro area debt instruments have been revised upwards from EUR 95.0 billion and EUR 150.3 billion to EUR 122.5 billion and EUR 194.2 billion in 2001 and 2002, respectively, with a concomitant decrease of errors and omissions. For January 2003, net inflows in euro area debt instruments have been revised upwards by EUR 6.7 billion.

The euro area current account registered a surplus of EUR 1.2 billion in March 2003, compared with EUR 7.4 billion in March 2002. The lower surplus resulted from a EUR 8.9 billion decrease in the goods surplus, which was only partially offset by a lower deficit for current transfers and by a shift of the balance for services from a deficit to a surplus. The capital account balance surplus increased slightly to EUR 0.7 billion. Turning to month-on-month developments on the basis of seasonally adjusted data, the current account recorded a deficit of EUR 1.7 billion in March 2003, compared with a surplus of EUR 1.9 billion the month before. The goods surplus decreased significantly to EUR 3.2 billion, from EUR 9.7 billion in February 2003, while the deficits for both income and current transfers were somewhat smaller than in the previous month. The developments in portfolio investment were mostly due to substantial net purchases (EUR 36.8 billion) of euro area debt instruments (almost exclusively bonds and notes) by non-resident investors, which were significantly higher than the still sizeable net purchases of foreign bonds and notes by euro area investors (EUR 15.9 billion). For equity securities, transactions of both resident and non-resident investors show a repatriation of funds towards home markets. Overall, the combined direct and portfolio investment flows turned from sizeable net outflows in the first quarter of 2002 (EUR 51.8 billion) into net inflows in the first quarter of 2003 (EUR 8.3 billion). In particular, investment by non-residents in euro area debt instruments increased sharply from EUR 4.8 billion to EUR 56.7 billion over this period. This development is in line with the shift observed in 2002 when foreign investors showed an increased preference for euro area debt instruments. Reserve assets (excluding valuation effects) decreased by EUR 5 billion in March 2003. The end-March stock of the Eurosystem's reserve assets stood at EUR 339.2 billion (   ). In addition to the updates for March 2003, this press release incorporates revisions for February 2003. The revisions of the financial account mostly concerned the portfolio investment item, as one Member State reported substantial changes in its debt instrument liabilities. Net inflows in euro area debt instruments have been revised downwards from EUR 30.4 billion to EUR 16.9 billion.

Additional information on the euro area b.o.p.

ECB Monthly Bulletin

Annexes

The results up to February 2003 will also be published in the next issue of the . A detailed methodological note is available on the ECB's website. The next press release on euro area balance of payments will be published on 27 May 2003.

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: Monthly balance of payments of the euro area. : Euro area current account - seasonally adjusted data (Euro 12). Reproduction is permitted provided that the source is acknowledged