Monthly developments in December 2001 and preliminary overall results for 2001

In 2001 as a whole, the current account was broadly in balance, recording a deficit of EUR 9.3 billion compared with a deficit of EUR 70.1 billion in 2000. The main factor behind this EUR 60.8 billion decline in the current account deficit was a EUR 62.4 billion increase in the goods surplus (from EUR 11.7 billion to EUR 74.1 billion). This sharp rise was due to an increase in the value of goods exports of around 6%, compared with a virtually unchanged value for goods imports. A shift in the services balance from a deficit of EUR 5.2 billion to a surplus of EUR 1.5 billion, combined with a small decrease in the deficit for current transfers (from EUR 49.0 billion to EUR 47.1 billion), also contributed to the decline in the current account deficit in 2001. These movements were only partially offset by an increase in the income deficit from EUR 27.5 billion to EUR 37.7 billion. Financial account developments in December 2001 were characterised by net outflows of EUR 11.1 billion in combined direct and portfolio investment. This was due to net outflows in portfolio investment (EUR 11.7 billion), as direct investment was close to balance (net inflows of EUR 0.6 billion). Within portfolio investment, equity portfolio investment continued the pattern already seen since May 2001 by registering net inflows of EUR 9.1 billion. Debt instruments, by contrast, registered net outflows (EUR 20.8 billion), which in turn reflected net outflows of EUR 29.2 billion in bonds and notes, and net inflows of EUR 8.4 billion in money market instruments. Euro area residents invested a net amount of EUR 11.6 billion in foreign bonds and notes, while non-residents were net sellers of euro area bonds and notes (EUR 17.6 billion). Regarding the money market, both euro area residents (EUR 10.2 billion) and non-residents (EUR 1.9 billion) were net sellers of money market instruments. Financial derivatives registered a net outflow of EUR 0.5 billion in December 2001, while the other investment account recorded a net inflow of EUR 9.4 billion. Reserve assets decreased by EUR 5.9 billion (excluding valuation effects). Errors and omissions showed a negative value of EUR 7.7 billion.

The current account recorded a surplus of EUR 2.9 billion in December 2001, compared with a deficit of EUR 8.2 billion in December 2000. This shift from a deficit to a surplus resulted mainly from an increase in the goods surplus from EUR 1.4 billion to EUR 10.4 billion, combined with a decrease in the deficits for both services (from EUR 2.7 billion to EUR 1.1 billion) and current transfers (from EUR 5.8 billion to EUR 5.1 billion). Meanwhile, the deficit for income widened marginally, from EUR 1.1 billion to EUR 1.3 billion. Seasonally adjusted data show that the widening of the goods surplus in the course of 2001 was particularly evident in the final quarter. Although the value of goods exports declined during last year in line with weak foreign demand, imports decreased by more due to the slowdown in domestic demand and the sharp fall in oil prices especially in the latter part of the year. The seasonally adjusted values of both exports and imports of services increased in December, thereby partly reversing the declines which began in September. This may reflect a partial recovery in international travel following the decline associated with the terrorist attacks of 11 September. The balanced position in direct investment resulted from net inflows in equity capital and reinvested earnings (EUR 5.9 billion) counterbalancing net outflows in other capital, mostly inter-company loans (EUR 5.2 billion). The combined net outflows in direct and portfolio investment in 2001 (EUR 53.0 billion) were lower than those in 2000 (EUR 87.6 billion). This development reflects primarily a switch in equity portfolio investment (from net outflows of EUR 242.6 billion in 2000 to net inflows of EUR 143.8 billion in 2001), which was only partially offset by a shift in both direct investment and portfolio investment in debt instruments from net inflows in 2000 to net outflows in 2001.

Note on balance of payments statistics produced by the Eurosystem

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

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 balance of payments statistics on the basis of the data on extra-euro area transactions reported by euro area Member States.

ECB Monthly Bulletin

Annexes

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

Annex 1 Annex 2

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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). Reproduction is permitted provided that the source is acknowledged