Euro area balance of payments (August 2006)

In August 2006 the seasonally adjusted current account of the euro area recorded a deficit of EUR 6.9 billion, as a result of deficits in goods and in current transfers. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 18 billion, reflecting net outflows in both direct and portfolio investment.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 6.9 billion in August 2006 (corresponding to a deficit of EUR 3.9 billion in non-seasonally adjusted terms). This reflected deficits in goods (EUR 3.5 billion) and in current transfers (EUR 6.4 billion) that were partly offset by a surplus in income (EUR 2.4 billion). The services account was close to balance.

The 12-month cumulated current account up to August 2006 recorded a deficit of EUR 39.6 billion, i.e. around 0.5% of GDP, compared with a surplus of EUR 14.3 billion a year earlier. This shift mainly resulted from a decrease of EUR 54.1 billion in the goods surplus. The deficit for current transfers also increased by EUR 9.4 billion over this period, but this was roughly offset by an increase in the surplus for services and a decrease in the income deficit.

In the financial account, combined direct and portfolio investment recorded a net outflow of EUR 18 billion in August 2006, reflecting net outflows in both direct investment (EUR 3 billion) and portfolio investment (EUR 15 billion).

Within direct investment, net foreign investment by euro area corporations surpassed net investment in the euro area by non-resident corporations, which led to net outflows of EUR 4 billion in equity capital and reinvested earnings.

The portfolio investment account recorded net outflows in both equity (EUR 13 billion) and debt instruments (EUR 3 billion), mainly as the result of net purchases of foreign securities by euro area residents.

Other investment recorded net inflows of EUR 19 billion, mainly as a result of net inflows in MFIs excluding the Eurosystem (EUR 26 billion) that were partly offset by net outflows in other sectors, i.e. non-monetary financial institutions, non-financial corporations and households (EUR 6 billion).

Reserve assets increased by EUR 1 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 326 billion at the end of August 2006.

In the 12-month period to August 2006, combined direct and portfolio investment showed cumulated net inflows of EUR 8 billion, compared with net inflows of EUR 92 billion a year earlier. This development resulted from lower net inflows in portfolio investment (from EUR 248 billion to EUR 84 billion) that were only partly counterbalanced by lower net outflows in direct investment (from EUR 157 billion to EUR 77 billion). The decrease in net inflows in portfolio investment reflected declining net inflows in equity and a shift from net inflows to net outflows in debt securities. The net outflows in direct investment decreased on account of an increase in net investment in the euro area by foreign corporations and a reduction of net foreign investment by euro area residents.

In addition to the balance of payments for August 2006, this press release incorporates revisions for July 2006. These revisions have not significantly altered the previously published statistics.

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 headings “Data services”/“Latest monetary, financial markets and balance of payments statistics”. These data can also be downloaded using the ECB’s Statistical Data Warehouse (SDW). The results up to August 2006 will also be published in the November 2006 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 23 November 2006. In addition, a separate press release on the geographical breakdown of the i.i.p. as at the end of 2005, including annual revisions on the euro area b.o.p. and i.i.p., will be published on 14 November 2006.

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

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