Euro area balance of payments (Monthly developments in January 2005)

In January 2005 the seasonally adjusted current account of the euro area recorded a surplus, mainly as a result of surpluses in goods and services which were only partly offset by a deficit in current transfers. In the financial account, net purchases of foreign bonds and notes by euro area residents mainly accounted for the net outflows in combined direct and portfolio investment.

The seasonally adjusted current account of the euro area showed a surplus of EUR 3.2 billion in January 2005 (corresponding to a EUR 7.9 billion deficit in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 8.7 billion) and services (EUR 2.3 billion) that were partly offset by a deficit in current transfers (EUR 7.8 billion). The income account was balanced.

Compared with the revised data for December 2004, the seasonally adjusted current account surplus increased by EUR 0.4 billion, reflecting higher surpluses in goods and services (of EUR 1.6 billion and of EUR 1.4 billion respectively) and a decrease in the income deficit (of EUR 1.2 billion) that were almost counterbalanced by an increase in the current transfers deficit (of EUR 3.7 billion).

The 12-month cumulated surplus of the euro area current account up to January 2005 amounted to EUR 37.8 billion, i.e. around 0.5% of GDP, compared with EUR 24.9 billion a year earlier. This increase resulted from a lower deficit in income and a higher surplus in services, partly counterbalanced by a lower goods surplus. The deficit in current transfers remained broadly unchanged over this period.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 31.2 billion in January 2005, reflecting net outflows in both direct investment (EUR 13.1 billion) and portfolio investment (EUR 18.2 billion).

The net outflows in direct investment were accounted for by net outflows in both equity capital and reinvested earnings (EUR 3.9 billion) and other capital (EUR 9.2 billion). In the latter category, euro area affiliates of foreign companies paid back inter-company loans (EUR 5.2 billion).

In portfolio investment, the net outflows of EUR 18.2 billion resulted from net outflows in both equity securities (EUR 5.5 billion) and debt instruments (EUR 12.6 billion). The net outflows in debt instruments were mostly related to net purchases of foreign bonds and notes by euro area residents (EUR 29.1 billion), partly counterbalanced by net purchases of euro area money market instruments by non-residents (EUR 21.2 billion).

Other investment recorded net inflows of EUR 60.9 billion, as a result of net short-term inflows registered by monetary financial institutions (MFIs) excluding the Eurosystem.

Reserve assets increased by EUR 1.5 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 289.0 billion at the end of January 2005

In the 12-month period up to January 2005, combined direct and portfolio investment recorded cumulated net inflows of EUR 2.9 billion, compared with net inflows of EUR 20.3 billion a year earlier. This resulted from higher net outflows in direct investment (from EUR 12.1 billion to EUR 43.8 billion), which were only partly offset by higher net inflows in portfolio investment (from EUR 32.5 billion to EUR 46.8 billion). The developments in portfolio investment mainly reflected higher net inflows in equity securities, as a result of an increase in net purchases by non-residents.

In addition to the monthly balance of payments data for January 2005, this press release incorporates some revisions for December 2004. The revisions had only a minor impact on the net figures.

A complete set of updated euro area balance of payments statistics is available in the “Statistics” section of the ECB’s website, under the heading “Data services”/“Latest monetary, financial markets and balance of payments statistics”. The results up to January 2005 will also be published in the April 2005 issue of the ECB’s Monthly Bulletin. A detailed methodological note is available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 22 April 2005.

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

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