Euro area balance of payments (September 2007)

The working day and seasonally adjusted current account of the euro area was close to balance in September 2007, reflecting surpluses in goods and services which were nearly offset by the deficit in current transfers. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 24 billion.

The working day and seasonally adjusted current account of the euro area was close to balance in September 2007 (corresponding to a surplus of EUR 4.4 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 3.7 billion) and services (EUR 3.4 billion), which were offset almost in full by a deficit in current transfers (EUR 6.4 billion). The income account was balanced.

The 12-month cumulated, working day-adjusted current account up to September 2007 recorded a surplus of EUR 26.6 billion (about 0.3% of euro area GDP), compared with a deficit of EUR 21.7 billion a year earlier. This shift resulted mainly from an increase in the goods surplus (from EUR 9.3 billion to EUR 65.1 billion), which was only partly offset by a shift from surplus to deficit in the income account (from EUR 9.5 billion to EUR -4.9 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 24 billion in September 2007, reflecting net inflows in portfolio investment (EUR 46 billion) and net outflows in direct investment (EUR 23 billion).

The developments in direct investment resulted from net outflows both in equity capital and reinvested earnings (EUR 6 billion) and in other capital, mostly inter-company loans (EUR 17 billion).

The portfolio investment account recorded net inflows in both equity (EUR 21 billion) and debt instruments (EUR 25 billion). The net inflows in equity were mainly related to net purchases of euro area equity securities by non-residents. The net inflows in debt instruments predominantly concerned net sales of foreign money market instruments by euro area residents (EUR 12 billion) and net purchases of euro area money market instruments by non-residents (EUR 11 billion).

Other investment recorded net outflows of EUR 16 billion, mainly as a result of net outflows to other sectors (EUR 14 billion).

Reserve assets increased by EUR 2 billion (excluding valuation effects). At the end of September 2007 the stock of the Eurosystem’s reserve assets stood at EUR 340 billion.

In the 12-month period to September 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 249 billion, compared with net outflows of EUR 16 billion a year earlier. This shift mainly reflected higher net inflows in portfolio investment (from EUR 111 billion to EUR 415 billion), which were counterbalanced to a limited extent by higher net outflows in direct investment (from EUR 127 billion to EUR 166 billion). The developments in portfolio investment were largely related to higher net purchases of euro area debt instruments by non-residents (from EUR 319 billion to EUR 547 billion).

In addition to the balance of payments for September 2007, this press release incorporates revisions for August 2007.

The main changes consist of higher net combined direct and portfolio investment inflows, which were revised upwards from EUR 5 billion to EUR 15 billion. This mainly resulted from higher net portfolio investment inflows, which were revised upwards from EUR 13 billion to EUR 22 billion.

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, as well as the historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW). Results up to September 2007 will also be published in the December 2007 issues of the ECB’s Monthly Bulletin and 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 21 December 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.