Euro area balance of payments (Monthly developments in February 2005 and revised data since 1997)

In February 2005 the seasonally adjusted current account of the euro area recorded a surplus of EUR 5.1 billion, 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 euro area bonds and notes by non-residents mainly accounted for the net inflows of EUR 18.0 billion in combined direct and portfolio investment.

The seasonally adjusted current account of the euro area showed a surplus of EUR 5.1 billion in February 2005 (corresponding to a EUR 8.0 billion surplus in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 7.0 billion) and services (EUR 2.2 billion) that were partly offset by a deficit in current transfers (EUR 4.0 billion). The income account was balanced.

Compared with the revised data for January 2005, the seasonally adjusted current account balance moved from a deficit to a surplus, thereby increasing by EUR 6.9 billion. This was mainly due to lower deficits in income and current transfers (EUR 3.7 billion and EUR 3.5 billion respectively). The surplus in services decreased slightly (by EUR 0.6 billion), while the goods surplus remained almost the same.

The 12-month cumulated surplus of the euro area current account up to February 2005 amounted to EUR 36.5 billion, i.e. around 0.5% of GDP, compared with EUR 28.9 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 inflows of EUR 18.0 billion in February 2005, reflecting net inflows in portfolio investment (EUR 22.6 billion), which were partly offset by net outflows in direct investment (EUR 4.6 billion).

Direct investment net outflows related mainly to other capital (mostly inter-company loans).

The net inflows in portfolio investment mainly resulted from net purchases of euro area bonds and notes by non-residents (EUR 39.4 billion) and net sales of foreign money market instruments by euro area residents (EUR 15.2 billion). These were only partly offset by net purchases of foreign equity securities by euro area residents (EUR 19.5 billion).

Other investment was close to balance.

Reserve assets decreased by EUR 5.0 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 283.2 billion at the end of February 2005

In the 12-month period up to February 2005, combined direct and portfolio investment was close to balance, compared with net inflows of EUR 43.2 billion a year earlier. This resulted mainly from higher net outflows in direct investment (increasing from EUR 15.8 billion to EUR 63.3 billion), which were mainly due to lower direct investments in the euro area by foreign corporations.

In addition to the monthly data for February 2005, this press release incorporates a revised set of balance of payments statistics for 1997 to 2004, and for January 2005. While the revisions for the years 1997, 1998 and 1999 were minor, an updated assessment of income on direct investment has led to some revisions of the euro area current account for the years 2000, 2001 and 2002. In comparison with the previously published data, the current account now shows a higher deficit in 2000 (revised by EUR 4.5 billion up to EUR 82.2 billion), a lower deficit in 2001 (revised by EUR 7.5 billion up to EUR 3.5 billion), and a higher surplus in 2002 (revised by EUR 6.7 billion up to EUR 64.5 billion). Some other revisions have slightly reduced the euro area current account surplus for 2003, and have increased the surplus for 2004 by EUR 3.0 billion, to EUR 45.2 billion. The main revisions in 2004 relate to the services item.

In the financial account, the main changes consisted of higher net combined direct and portfolio investment inflows, which were revised upwards from EUR 109.4 billion to EUR 128.4 billion in 2002, and from EUR 38.3 billion to EUR 48.8 billion in 2003. In 2002, this resulted from an increase in the net inflows of euro area money market instruments and in 2003 from higher net direct investment inflows into the euro area. For 2004, net outflows of other investment have been revised downwards (by EUR 25.5 billion).

Finally, the seasonally adjusted current account time-series has been revised up to January 2005, with a particular effect on income, as a consequence of a methodological change in one Member State.

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 February 2005 will also be published in the May 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 27 May 2005. A separate press release on the quarterly euro area balance of payments, including data vis-à-vis main counterparts, and quarterly international investment position statistics will be issued on 28 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.