Euro area balance of payments (March 2007)

The seasonally adjusted current account of the euro area recorded a surplus of EUR 5.4 billion in March 2007, reflecting surpluses in goods and services that were partly offset by a deficit in current transfers. In the financial account, net inflows in combined direct and portfolio investment mainly concerned net portfolio purchases of securities by non-residents.

The working day and seasonally adjusted current account of the euro area recorded a surplus of EUR 5.4 billion in March 2007 (corresponding to EUR 8.8 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 7.2 billion) and services (EUR 4.2 billion) that were partly counterbalanced by a deficit in current transfers (EUR 5.1 billion). The income account was balanced.

The 12-month cumulated, working day-adjusted current account up to March 2007 recorded a surplus of EUR 7.0 billion, i.e. about 0.1% of GDP, compared with a deficit of EUR 18.5 billion a year earlier. This shift resulted from a reduction in the income deficit (by EUR 14.5 billion) and from increases in the surpluses in goods (by EUR 11.4 billion) and services (by EUR 2.0 billion), which coincided with a higher deficit in current transfers (by EUR 2.5 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 64 billion in March 2007, reflecting net inflows in portfolio investment (EUR 72 billion) and net outflows in direct investment (EUR 8 billion).

Within direct investment, the net outflows resulted from net outflows in equity capital and reinvested earnings (EUR 20 billion) that were partly counterbalanced by net inflows in other capital, mostly inter-company loans (EUR 12 billion)

The portfolio investment account recorded net inflows in both equity (EUR 42 billion) and debt instruments (EUR 30 billion). Net inflows in equity concerned both net purchases of euro area equity by non-residents (EUR 26 billion) and net sales of foreign equity by euro area residents (EUR 16 billion). The net inflows in debt instruments resulted from net inflows in bonds and notes (EUR 44 billion) and were partly counterbalanced by net outflows in money market instruments (EUR 14 billion).

Other investment recorded net outflows of EUR 102 billion, mainly as a result of net outflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 72 billion) and by other sectors (EUR 38 billion).

Reserve assets decreased by EUR 2 billion (excluding valuation effects). At the end of March 2007 the stock of the Eurosystem’s reserve assets stood at EUR 332 billion.

In the 12-month period to March 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 229 billion, compared with net outflows of EUR 46 billion a year earlier. This shift resulted from both higher net inflows in portfolio investment (from EUR 168 billion to EUR 383 billion) and lower net outflows in direct investment (from EUR 214 billion to EUR 154 billion). The developments in portfolio investment largely reflected higher net inflows in bonds and notes (from EUR 7 billion to EUR 223 billion). The decrease in net outflows in direct investment was due to lower net outflows in equity capital and reinvested earnings (from EUR 193 billion to EUR 150 billion) and in other capital, mostly inter-company loans (from EUR 21 billion to EUR 4 billion).

In addition to the balance of payments for March 2007, this press release incorporates revisions for February 2007. Those revisions have not significantly affected the previously published data.

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”.

The data can also be downloaded using the ECB’s Statistical Data Warehouse (SDW) at http://sdw.ecb.int (as well as the euro area data according to the composition of the euro area during the reference period).

Results up to March 2007 will also be published in the June 2007 issue of the ECB’s Monthly Bulletin and the Statistics Pocket Book.

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 26 June 2007.

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.