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

In March 2005 the seasonally adjusted current account of the euro area recorded a surplus, mainly as a result of a surplus in goods. This was partly offset by deficits in income and current transfers. In the financial account, euro area investment abroad in bonds and notes 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 2.3 billion in March 2005 (corresponding to a EUR 3.0 billion surplus in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 9.2 billion) and services (EUR 1.0 billion) that were partly offset by deficits in current transfers (EUR 4.7 billion) and income (EUR 3.2 billion).

Compared with the revised data for February 2005, the seasonally adjusted current account surplus decreased by EUR 3.7 billion. This was due to a decline in the income item (by EUR 3.4 billion, from a close to balance position), a decrease in the services surplus (EUR 1.8 billion), and an increase in the current transfers deficit (EUR 0.7 billion), partially counterbalanced by a rise in the goods surplus (EUR 2.3 billion).

The 12-month cumulated surplus of the euro area current account up to March 2005 amounted to EUR 34.3 billion, i.e. around 0.5% of GDP, compared with EUR 32.1 billion a year earlier. This increase resulted from lower deficits in income and current transfers and a higher surplus in services, partly counterbalanced by a lower goods surplus.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 11.5 billion in March 2005, reflecting net outflows in both direct investment (EUR 8.8 billion) and portfolio investment (EUR 2.8 billion).

The developments in direct investment were mostly accounted for by net outflows in other capital (mostly inter-company loans), amounting to EUR 6.9 billion. In particular, euro area companies increased loans to their foreign affiliates by EUR 8.6 billion.

In portfolio investment, net outflows of EUR 2.8 billion resulted from net outflows in debt instruments (EUR 12.4 billion) that were partly compensated by net inflows in equity securities (EUR 9.6 billion). The net outflows in debt instruments were mostly related to net purchases of foreign bonds and notes by euro area residents (EUR 23.5 billion), partly counterbalanced by net purchases of euro area money market instruments by non-residents (EUR 14.7 billion).

Net inflows in other investment (EUR 5.6 billion) mainly resulted from net inflows by the general government (EUR 8.0 billion).

Reserve assets decreased by EUR 1.5 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 284.9 billion at the end of March 2005

In the 12-month period up to March 2005, combined direct and portfolio investment recorded cumulated net inflows of EUR 9.2 billion, compared with net outflows of EUR 2.7 billion a year earlier. This change resulted from higher net inflows in portfolio investment (from EUR 34.1 billion to EUR 59.2 billion), which were only partly offset by higher net outflows in direct investment (from EUR 36.8 billion to EUR 50.0 billion). The developments in portfolio investment mainly reflected lower net purchases of foreign equity securities by euro area residents, while those in direct investment reflected lower investment in the euro area by non-residents.

In addition to the monthly balance of payments data for March 2005, this press release incorporates some revisions for February 2005. 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 March 2005 will also be published in the June 2005 issue of the ECB’s Monthly Bulletin. A detailed methodological note (pdf file) is available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 27 June 2005.

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

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