Euro area balance of payments (May 2008)

In May 2008 the working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 7.3 billion. In the financial account, combined direct and portfolio investment showed net inflows of EUR 13 billion.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 7.3 billion in May 2008 (corresponding to a deficit of EUR 21.4 billion in non-adjusted terms). This reflected deficits in current transfers (EUR 5.9 billion) and goods (EUR 3.3 billion), which were partly offset by a surplus in services (EUR 2.7 billion). The income account was close to balance.

The 12-month cumulated, working day-adjusted current account up to May 2008 recorded a deficit of EUR 5.8 billion, compared with a surplus of EUR 13.0 billion a year earlier. This shift was due mainly to an increase in the deficit in current transfers (from EUR 79.8 billion to EUR 93.1 billion) and decreases in the surpluses in goods (from EUR 43.1 billion to EUR 35.4 billion) and income (from EUR 5.6 billion to close to balance). Conversely, the services surplus increased from EUR 44.1 billion to EUR 51.5 billion.

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 13 billion in May 2008, reflecting net inflows in portfolio investment (EUR 23 billion) and net outflows in direct investment (EUR 10 billion).

The net outflows in direct investment resulted from net outflows both in equity capital and reinvested earnings (EUR 7 billion) and in other capital, mostly inter-company loans (EUR 3 billion).

Portfolio investment recorded net inflows both in equity (EUR 7 billion) and in debt instruments (EUR 16 billion). The net inflows in debt instruments reflected net inflows in bonds and notes (EUR 37 billion), which were partly offset by net outflows in money market instruments (EUR 21 billion).

Financial derivatives recorded net outflows of EUR 30 billion.

Other investment showed net inflows of EUR 59 billion, mainly as a result of net inflows in the Eurosystem (EUR 20 billion) and in MFIs excluding the Eurosystem (EUR 36 billion).

Reserve assets decreased by EUR 3 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 349 billion at the end of May 2008.

In the 12-month period to May 2008 combined direct and portfolio investment showed cumulated net outflows of EUR 42 billion, compared with net inflows of EUR 208 billion a year earlier. This shift largely resulted from a decline in net inflows in portfolio investment (from EUR 366 billion to EUR 168 billion), which in turn mainly reflected lower net purchases of euro area securities by non-resident investors.

In addition to the balance of payments for May 2008, this press release incorporates revisions for April 2008. In non-adjusted terms, those revisions largely resulted in a lower current account deficit (down from EUR 9.2 billion to EUR 7.4 billion), and in a shift in portfolio investment from close to balance to outflows of EUR 4 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). Data up to May 2008 will also be published in the August 2008 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 22 August 2008.

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.