Euro area balance of payments (Monthly developments in June 2004)

In June 2004 the seasonally adjusted current account of the euro area was almost balanced, as surpluses in goods and services largely counterbalanced deficits in income and current transfers. In the financial account, the net acquisition of euro area debt securities by non-residents mainly accounted for the net inflows in combined direct and portfolio investment.

Current account

The seasonally adjusted current account of the euro area was almost balanced in June 2004 (corresponding to a EUR 4.5 billion surplus in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 8.2 billion) and services (EUR 0.6 billion) that were offset by deficits in income (EUR 4.7 billion) and current transfers (EUR 4.6 billion).

Compared with the revised data for the previous month, the seasonally adjusted current account decreased by EUR 6.5 billion. This mainly resulted from decreases in the surpluses for goods (by EUR 4.3 billion) and services (by EUR 1.8 billion), which reflected higher imports and lower exports over this period, and from a rise in the income deficit (by EUR 1.0 billion). The deficit for current transfers improved slightly (by EUR 0.6 billion).

 Euro area balance of payments: 12-month cumulated flows (EUR billions) —— current account balance ------ net direct investment —— net portfolio investment

Financial account

              The 12-month cumulated surplus of the euro area current account up to June 2004 amounted to EUR 48.3 billion, i.e. about 0.7% of GDP, compared with EUR 39.0 billion a year earlier (see chart). The EUR 9.3 billion increase in the cumulated current account resulted from a higher goods surplus (as goods exports rose faster than goods imports over this period) and a lower income deficit, which were partly counterbalanced by a lower services surplus and a higher deficit for current transfers.

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 20.6 billion in June 2004, reflecting net inflows in portfolio investment (EUR 29.5 billion), which were partly offset by net outflows in direct investment (EUR 8.9 billion).

Net outflows in direct investment were largely accounted for by net outflows in equity capital and reinvested earnings amounting to EUR 9.7 billion.

With regard to portfolio investment, the developments mainly reflected net inflows in debt instruments (EUR 29.4 billion) largely as a result of the net acquisition of euro area bonds and notes by non-residents (EUR 25.1 billion). In addition, net sales of foreign money market instruments (EUR 7.6 billion) by euro area residents contributed to the net inflows in debt instruments. Net investment in equity securities was balanced.

Other investment recorded net outflows of EUR 18.5 billion, mainly as a result of net outflows registered by MFIs and, to a lesser extent, by the money-holding sectors (other sectors and general government).

Reserve assets increased by EUR 1.1 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 301.4 billion as at the end of June 2004.

In the 12-month period up to June 2004, combined direct and portfolio investment recorded cumulated net outflows of EUR 111.9 billion, compared with net inflows of EUR 141.9 billion a year earlier. This reversal mainly stems from a switch in portfolio investment from net inflows of EUR 125.4 billion to net outflows of EUR 40.9 billion and, to a smaller extent, a switch in direct investment from net inflows of EUR 16.5 billion to net outflows of EUR 71.0 billion. The shift in portfolio investment mostly resulted from lower net purchases of euro area debt instruments by non-residents. The net acquisition of equity securities increased on both the asset and the liability side, though at a faster pace for foreign securities bought by euro area residents.

Data revisions

In addition to the monthly balance of payments data for June 2004, this press release incorporates revisions for May 2004.

Additional information on the euro area balance of payments and international investment position

A complete set of updated euro area balance of payments and international investment position statistics is available on the ECB’s website in the “Statistics” section under the heading “Data services”/“Latest monetary, financial markets and balance of payments statistics”. The results up to June 2004 will also be published in the September 2004 issue of the ECB’s Monthly Bulletin. 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 21 September 2004.

Annexes

Table 1: Euro area current account – seasonally adjusted data.

Table 2: Monthly balance of payments of the euro area – non-seasonally adjusted data.