Monthly developments in June 2002

Developments in the first half of 2002 were characterised by the cumulated current account balance turning from a deficit of EUR 20.4 billion in the same period last year into a surplus of EUR 9.3 billion. A significant increase in the goods surplus (from EUR 21.4 billion to EUR 56.8 billion) was the main reason for this development, which was only marginally offset by slightly higher deficits for income and current transfers and a shift from a small surplus to balance for services. The rise in the goods surplus was due to the value of imports decreasing at a stronger rate than that of exports (by 7.8% and 0.6% respectively), partly reflecting the significant decline in the price of oil imports over this period. In the financial account, combined direct and portfolio investment in the euro area recorded small net outflows of EUR 1.3 billion in June 2002, as net outflows in direct investment (EUR 15.5 billion) were mostly offset by net inflows in portfolio investment (EUR 14.3 billion). The net inflows in portfolio investment of EUR 14.3 billion in June stemmed from large net inflows in bonds and notes (EUR 25.4 billion). In particular, non-residents' transactions in euro area bonds and notes – debt securities with a maturity of over one year – resulted in net purchases of EUR 24.2 billion. Investment in equities and money market instruments was subdued on both the asset and the liability sides. Non-residents' transactions in equity securities issued by euro area residents resulted in net sales of EUR 3.5 billion. The other investment account recorded net outflows of EUR 31.0 billion in June 2002. In particular, MFIs' short-term liabilities may reflect a repatriation of liquid assets by non-residents (EUR 72.3 billion). Reserve assets increased by EUR 3.5 billion (excluding valuation effects) and net errors and omissions were EUR 31.9 billion.

The euro area current account showed a surplus of EUR 3.9 billion in June 2002 compared with a deficit of EUR 1.0 billion in June 2001. This development mainly resulted from an increase in the goods surplus (from EUR 8.4 billion to EUR 12.1 billion) together with small decreases in the deficits for both income and current transfers, while the surplus for services remained virtually unchanged. Looking at month-on-month developments on the basis of seasonally adjusted data, the values of both exports and imports of goods rose in June 2002 compared with May. These developments seem broadly consistent with the ongoing recovery in external and domestic demand. The net outflows in direct investment (EUR 15.5 billion) were the result of euro area investment abroad (EUR 15.6 billion). With regard to direct investment in the euro area, low net inflows of EUR 3.2 billion in the category "Equity and reinvested earnings" were counterbalanced by net outflows of equal size in "Other capital, mostly intercompany loans". On a cumulated basis in the first half of 2002, combined direct and portfolio investment recorded net outflows which were substantially lower (EUR 16.6 billion) than in the same period last year (EUR 105.1 billion).

Note on balance of payments statistics produced by the Eurosystem

Euro-indicators News Releases The results up to June 2002 will also be published in the September 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.

Table 1 Table 2

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: Monthly balance of payments of the euro area for 2001 and 2002. : Euro area current account - seasonally adjusted data. Reproduction is permitted provided that the source is acknowledged