Euro area balance of payments (August 2008)

In August 2008 the working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 8.4 billion. In the financial account, combined direct and portfolio investment showed net outflows of EUR 26 billion.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 8.4 billion in August 2008 (corresponding to a deficit of EUR 7.9 billion in non-adjusted terms). This reflected deficits in current transfers (EUR 7.0 billion), goods (EUR 4.1 billion) and income (EUR 1.6 billion), which were only partly offset by a surplus in services (EUR 4.2 billion).

The 12-month cumulated, working day-adjusted current account up to August 2008 recorded a deficit of EUR 24.4 billion (about 0.3% of euro area GDP), compared with a surplus of EUR 31.6 billion a year earlier. This shift was mainly due to a decrease in the surplus in goods (from EUR 62.4 billion to EUR 15.4 billion), an increase in the deficit in current transfers (from EUR 80.4 billion to EUR 90.2 billion) and a shift from surplus (EUR 3.7 billion) to deficit (EUR 5.1 billion) in the income account. Conversely, the services surplus increased from EUR 46.0 billion to EUR 55.5 billion.

In the financial account, combined direct and portfolio investment showed net outflows of EUR 26 billion in August 2008, reflecting net outflows both in direct investment (EUR 12 billion) and in portfolio investment (EUR 14 billion).

The net outflows in direct investment resulted largely from net outflows in equity capital and reinvested earnings (EUR 14 billion), which were partly offset by net inflows in other capital (mostly inter-company loans) (EUR 2 billion).

Portfolio investment recorded net outflows in, especially, debt instruments (EUR 12 billion), as the net inflows in bonds and notes (EUR 21 billion) were lower than the net outflows in money market instruments (EUR 34 billion). The developments in money market instruments resulted from both net purchases of foreign instruments by euro area residents and net sales of euro area instruments by non-resident investors.

Financial derivatives recorded net outflows of EUR 6 billion.

Other investment showed net inflows of EUR 2 billion, mainly as a result of net inflows in the Eurosystem (EUR 3 billion) that were partly counterbalanced by net outflows in other sectors (EUR 1 billion).

Reserve assets decreased by EUR 2 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 351 billion at the end of August 2008.

In the 12-month period to August 2008 combined direct and portfolio investment showed cumulated net outflows of EUR 162 billion, compared with net inflows of EUR 260 billion a year earlier. This shift largely resulted from a decline in net inflows in portfolio investment (from EUR 415 billion to EUR 64 billion), which in turn mainly reflected a reduction in net purchases of euro area securities by non-resident investors (from EUR 952 billion to EUR 399 billion).

In addition to the balance of payments for August 2008, this press release incorporates revisions for July 2008. In non-adjusted terms, those revisions have resulted in a shift from a deficit of EUR 1.1 billion to a surplus of EUR 1.1 billion in the current account, and in an increase of net outflows in portfolio investment from EUR 5 billion to EUR 9 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 August 2008 will also be published in the November 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 24 November 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.