Monthly developments in June 2000

In the first half of 2000, the current account of the euro area recorded a deficit of EUR 11.8 billion, compared with a surplus of EUR 14.9 billion for the same period last year. This swing was due primarily to a lower goods surplus (EUR 27 billion, down from EUR 46.4 billion), in addition to higher deficits on services, income and current transfers. Although the value of exports of goods grew strongly during the first six months of this year, rising by around 23.3% relative to the corresponding months of last year, the value of imports rose even more rapidly - by almost 32.5%. Import growth stemmed from rising import prices - associated with higher oil prices and the depreciating euro - as well as rising demand in the euro area. On the exports side, while the growth of export volumes - related to gains in price competitiveness and robust foreign demand - was the main driving factor, increasing unit export values also had an impact. The main development in the financial account in June was the strong net portfolio investment inflows in the euro area (EUR 43.3 billion) - in both equity (EUR 18.6 billion) and debt instruments (EUR 24.7 billion) - mainly related to large purchases of euro area securities by foreign investors. Elsewhere in the financial account, net inflows in financial derivatives reached EUR 1.5 billion in June 2000. Net outflows in other investment amounted to EUR 61.6 billion, mainly as a reflection of short-term MFI activities. Eurosystem reserve assets fell by EUR 3.4 billion in June 2000. Errors and omissions amounted to EUR 15.6 billion in June 2000, and to a negative EUR 37.6 billion in the first six months of 2000.

In June 2000, the current account of the euro area recorded a deficit of EUR 0.1 billion, compared to a surplus of EUR 5.4 billion for the same month last year. This was due mainly to a decline in the goods surplus (from EUR 11.0 billion to EUR 6.8 billion), combined with an increase of EUR 1.1 billion in the deficit on transfers. The deficits in the services and income accounts remained broadly unchanged. In June 2000, the net balance on the capital account declined to EUR 0.4 billion, compared with EUR 1.4 billion in June 1999. For the first half of this year, the capital account registered a surplus of EUR 5.4 billion, compared with EUR 6.2 billion for the corresponding period of last year. Direct investment resulted in net outflows of EUR 2.5 billion. Net outflows of equity capital and reinvested earnings reached EUR 9.5 billion, which were, however, partly offset by net inflows of other capital, mainly inter-company loans, in an amount of EUR 7.0 billion. In the first six months of 2000 combined net direct and portfolio investment outflows were substantially lower (EUR 33.6 billion) than in the same period in 1999 (EUR 129.9 billion). This development was mainly related to swings from net outflows to net inflows in both net direct investment (from net outflows of EUR 68.2 billion to net inflows of EUR 128.6 billion) and in debt instruments (from net outflows of EUR 25.0 billion to net inflows of EUR 78.5 billion), with the latter mainly reflecting stronger investment by non-residents in euro area debt securities.

Annex 1 ECB Monthly Bulletin

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to this press release contains statistics produced by the Eurosystem in respect of the balance of payments (b.o.p.) of the euro area; the methodology has been developed in close co-operation with the European Commission (Eurostat) which publishes the b.o.p. for the European Union. The ECB compiles these statistics on the basis of the data on extra-euro area transactions reported by euro area countries. The results for June 2000 will also be published in the September 2000 issue of the . A detailed methodological note on euro area b.o.p. statistics is available on the ECB's website in the section Euro area statistics - download. Reproduction is permitted provided that the source is acknowledged