Monthly developments in November 2001 and revisions for the second and third quarters of 2001

In the first eleven months of 2001, the cumulative deficit on current account declined in comparison with the same period of 2000 (from EUR 61.9 billion to EUR 12.2 billion). This largely reflected an increase of EUR 53.4 billion in the cumulative goods surplus (from EUR 10.3 billion to EUR 63.7 billion), along with a shift in the services item from a deficit of EUR 2.5 billion to a surplus of EUR 2.6 billion, which was partially offset by an increase of EUR 10.1 billion in the income deficit (from EUR 26.4 billion to EUR 36.5 billion). At the same time, the deficit for current transfers decreased slightly, from EUR 43.3 billion to EUR 42 billion. The rising cumulative goods surplus is explained by the fact that the value of exports grew faster (7.2%) than that of imports (1.2%). Developments in the financial account in November 2001 were characterised by net inflows of EUR 19.3 billion in combined direct and portfolio investment, with direct investment accounting for EUR 7.8 billion and portfolio investment for EUR 11.5 billion. Within portfolio investment, equity portfolio investment continued the pattern already seen since May 2001 by registering net inflows of EUR 9.9 billion. Debt instruments also registered net inflows of EUR 1.6 billion, reflecting, in turn, net inflows of EUR 17.6 billion in bonds and notes, and net outflows of EUR 16.0 billion in money market instruments. With respect to money market instruments, investment by euro area residents in foreign securities totalled EUR 11.2 billion – the highest net outflow recorded in this item of the euro area b.o.p. thus far – while non-residents were net sellers of securities issued by euro area residents ( EUR 4.9 billion). Financial derivatives registered a net outflow of EUR 4.0 billion in November 2001, while the other investment account recorded one of EUR 30.7 billion. Reserve assets flows were balanced (excluding valuation effects), whereas errors and omissions amounted to EUR 12.1 billion. The current account balance increased by EUR 1.5 billion and EUR 6.6 billion in the second and third quarters, respectively, resulting in a lower deficit of EUR 9.9 billion in the second quarter and a surplus of EUR 5.3 billion in the third. The goods balance for the second quarter was revised upwards by EUR 0.8 billion. The revision for the current account in the third quarter was due mainly to an upward revision of the goods surplus by EUR 4.1 billion and the services surplus by EUR 2.0 billion, while the deficit for current transfers was revised marginally downwards and the income account remained virtually unchanged. As a result of the above revisions, errors and omissions increased by EUR 19.3 billion in the third quarter of 2001.

The current account registered a surplus of EUR 2.8 billion in November 2001, compared with a deficit of EUR 6.5 billion in November 2000. The move into surplus was due mainly to a shift from a goods deficit of EUR 0.5 billion to a surplus of EUR 9.3 billion, combined with a shift in the income account from a deficit of EUR 0.8 billion to a surplus of EUR 0.4 billion. These developments were partially offset by an increase in the services deficit from EUR 0.1 billion to EUR 1.9 billion, while the deficit for current transfers remained virtually unchanged as compared with November 2000. Seasonally adjusted data show that the goods surplus continued to increase in late 2001, primarily on account of a decline in import values (corresponding to a fall in oil prices at the end of last year), while export values remained fairly flat over the same period, largely as a result of weak foreign demand. Although exports of goods declined marginally in November, imports fell by a larger amount as economic activity in the euro area remained subdued and oil prices declined substantially in October and November. Exports of services have also been on a downward trend in recent months, while imports picked up in November, as compared with October. The net inflows in direct investment resulted from net inflows in both equity capital and reinvested earnings (EUR 5.2 billion) as well as from net inflows in other capital, mostly inter-company loans (EUR 2.6 billion). In the first eleven months of 2001, combined net outflows in direct and portfolio investment (EUR 41.9 billion) were less than half as high as the same period in 2000 (EUR 100.0 billion). This development is explained primarily by a switch in equity portfolio investment (from net outflows of EUR 236.3 billion in the period from January to November 2000 to net inflows of EUR 134.7 billion in the corresponding period in 2001), which was only partially offset by a shift both in direct investment and in investment in debt instruments from net inflows in 2000 to net outflows in 2001. In addition to the key items for November 2001, this press release incorporates a revised set of balance of payments (b.o.p.) statistics for the second and third quarters of 2001, as well as some additional breakdowns regarding the third quarter of 2001. For the third quarter of 2001, revisions reduced the net inflows in portfolio investment from EUR 62.5 billion to EUR 53.6 billion, and increased the net outflows in other investment from EUR 85.3 billion to EUR 95.6 billion. For the second quarter of 2001, there were no major revisions to the financial account data.

Note on balance of payments statistics produced by the Eurosystem

Euro-indicators News Releases The results up to November 2001 will also be published in the February 2002 issue of the

The European Central Bank and the European Commission (Eurostat) simultaneously disseminate press releases on the quarterly balance of payments for the euro area and the EU15 (   ). In line with the agreed allocation of responsibility, the European Central Bank is in charge of compiling and disseminating the euro area monthly and quarterly balance of payments statistics, whereas the European Commission (Eurostat) focuses on quarterly and annual aggregates of the EU15. The data comply with international standards, in particular those set out in the IMF Manual on Balance of Payments Statistics (5th edition). The aggregates for the euro area and EU15 are compiled consistently on the basis of Member States' transactions with residents of countries outside the euro area and the European Union respectively.

ECB Monthly Bulletin

Annexes

. A detailed methodological note is available on the ECB's website.

Annex 1 Annex 2 Annex 3

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- Monthly balance of payments of the euro area for 2000 and 2001 (Euro 12) - Euro area current account - seasonally adjusted data (Euro 12). - Quarterly balance of payments of the euro area (Euro 12). Reproduction is permitted provided that the source is acknowledged