Euro area balance of payments (November 2005)

In November 2005 the seasonally adjusted current account of the euro area recorded a deficit of EUR 10.1 billion as the deficits in income and current transfers exceeded the surpluses in goods and services. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 44 billion, reflecting predominantly net purchases of foreign portfolio securities by euro area residents.

The seasonally adjusted current account of the euro area showed a deficit of EUR 10.1 billion in November 2005 (corresponding to a deficit of EUR 8.5 billion in non-seasonally adjusted terms). This reflected deficits in income (EUR 10.1 billion) and current transfers (EUR 6.6 billion) that were only partly offset by surpluses in goods (EUR 3.1 billion) and services (EUR 3.4 billion).

The 12-month cumulated current account up to November 2005 recorded a deficit of EUR 20.3 billion, i.e. around 0.3% of GDP, compared with a surplus of EUR 42.6 billion (around 0.6% of GDP) a year earlier. This shift resulted mainly from a decline of EUR 44.5 billion in the goods surplus, reflecting an increase in the value of imports that exceeded that of exports.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 44 billion in November 2005, reflecting net outflows in both direct investment (EUR 12 billion) and portfolio investment (EUR 32 billion).

The developments in direct investment reflected net outflows of EUR 8 billion in other capital (mostly inter-company loans) as euro area companies increased loans to their foreign affiliates. Net outflows of EUR 5 billion were also recorded in equity capital and reinvested earnings.

In portfolio investment, both equity and debt instruments recorded net outflows of EUR 7 billion and EUR 25 billion respectively. The net outflows in debt instruments were due mainly to net purchases of bonds and notes by euro area residents (EUR 16 billion).

Other investment recorded net inflows of EUR 38 billion as a result of net inflows in monetary financial institutions (MFIs) excluding the Eurosystem (EUR 56 billion), which were partly offset by outflows in other sectors (EUR 20 billion).

Reserve assets decreased by EUR 1.2 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 322.7 billion at the end of November 2005.

In the 12-month period up to November 2005, combined direct and portfolio investment showed cumulated net inflows of EUR 57 billion, compared with net outflows of EUR 42 billion a year earlier. This resulted mainly from increased net inflows in portfolio investment (from EUR 10 billion to EUR 205 billion) that were largely associated with higher net purchases of euro area equity securities and money market instruments by non-residents. Over the same period, net outflows in direct investment rose by EUR 97 billion on account of both higher investment abroad by euro area residents and lower investment in the euro area by non-residents.

In addition to the monthly balance of payments data for November 2005, this press release incorporates some revisions for the period from April 2005 to October 2005. Net inflows in portfolio investment were revised upwards from EUR 14 billion to EUR 30 billion for September 2005.

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 November 2005 will also be published in the February 2006 issue of the ECB’s Monthly Bulletin. A detailed methodological note [pdf] is available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 22 February 2006. In addition, a separate press release on the quarterly euro area balance of payments (including a geographical breakdown) and quarterly details on the euro area international investment position will be published on 30 January 2006.

Table 1: Current account of the euro area – seasonally adjusted data.

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