Monthly developments in July 2001

The cumulated current account deficit declined to EUR 15.3 billion during the period from January to July 2001, from EUR 23.2 billion for the same period last year. This largely reflects a strong increase in the goods surplus to EUR 34.7 billion from EUR 18.2 billion, which was only partially offset by the EUR 7.6 billion increase in the deficit for income. Meanwhile, the cumulated deficits for services and current transfers increased only marginally. The rising cumulated goods surplus is explained by the faster growth of exports (12.9%) than of imports (10.1%). In the financial account, combined direct and portfolio investment of the euro area registered net inflows in July 2001 amounting to EUR 8.8 billion. The net inflows in July are primarily explained by net inflows of EUR 7.2 billion in the direct investment account, which are the largest net direct investment inflows in the euro area since 1999. These net inflows were due to net inflows of EUR 13.5 billion in "other capital", mostly intercompany loans, which more than offset net outflows in direct investment in "equity" of EUR 6.3 billion. Financial derivatives registered net outflows of EUR 4.8 billion and the other investment account net outflows of EUR 16.0 billion. Reserve assets remained unchanged, whereas errors and omissions amounted to EUR 15.7 billion.

Note on balance of payments statistics produced by the Eurosystem

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Annex

The current account deficit of the euro area increased to EUR 4.1 billion in July 2001 from EUR 2.5 billion in July 2000, mainly because of an increase in the deficit for income to EUR 8.1 billion from EUR 4.7 billion, combined with a slight decrease in the surplus for services (of EUR 0.6 billion). These developments were only partly offset by the increase in the goods surplus (to EUR 8.5 billion from EUR 6.3 billion), while the deficit for current transfers remained virtually unchanged. Seasonally adjusted data show that the increase in the goods surplus since the beginning of the year is mainly due to a fall in the value of imports largely resulting from lower import prices, while export values have flattened out in line with weak foreign demand. The portfolio investment account of the euro area registered net inflows of EUR 1.6 billion in July 2001. Portfolio investment in equity recorded net inflows of EUR 4.4 billion, whereas debt instruments realised net outflows of EUR 2.8 billion. Despite the net inflows in June and July 2001, net outflows for direct investment and portfolio investment from the euro area in the first seven months of 2001 were still higher than those during the same period in 2000. Net inflows in direct investment (EUR 105.0 billion) in the corresponding period of 2000 have become net outflows in 2001 (EUR 83.9 billion). By contrast, there were large net outflows in portfolio investment (EUR 150.6 billion) in the period from January to July 2000, while the portfolio investment account was close to balance in the same period in 2001. It may be worth recalling, however, that the large net inflows in direct investment and the significant net outflows in portfolio investment in the first seven months of 2000 were largely influenced by a company merger, settled via the exchange of shares, which was recorded as direct investment in the euro area and a portfolio equity net outflow from the euro area. The methodology used was developed in close co-operation with the European Commission (Eurostat) which publishes the Balance of Payments 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 July 2001 will also be published in the October 2001 issue of the . A detailed methodological note is available on the ECB's website.

Annex 1 Annex 2

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to this press release contains statistics produced by the Eurosystem for the monthly balance of payments of the euro area for 2000 and 2001 (Euro 12 data); contains the seasonally adjusted current account data for Euro 12. Reproduction is permitted provided that the source is acknowledged