Monthly developments in October 2002

During the first ten months of 2002, the cumulated current account balance shifted to a surplus of EUR 40.9 billion, compared with a deficit of EUR 18.7 billion in the same period last year. This development largely resulted from a substantial increase in the goods surplus (by EUR 51.4 billion) and, to a lesser extent, from a small increase in the services surplus (by EUR 7.3 billion), while the deficits for both income and current transfers remained broadly unchanged. The rise in the goods surplus was mostly due to a significant decline in the value of imports (by 4.0%), combined with a smaller increase in exports (by 2.2%). In the financial account, combined direct and portfolio investment of the euro area recorded net inflows of EUR 14.4 billion in October 2002. This development is accounted for by significantly higher net inflows of portfolio investment, while the direct investment account of the euro area registered net outflows of EUR 5.0 billion in October 2002. Large net inflows in debt instruments of EUR 23.0 billion explain the sizeable net inflows in portfolio investment in October. It was primarily the large net inflows in money market instruments of EUR 17.6 billion that accounted for the inflows in debt instruments in October, whereas bonds and notes recorded somewhat smaller net inflows of EUR 5.3 billion. The net outflows in the other investment account (EUR -38.0 billion) mainly reflected the increase in net external short-term assets of euro area resident MFIs.

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Eurostat's Euro-indicators News Releases The results up to October 2002 will also be published in the January 2003 issue of the

The euro area current account registered a surplus of EUR 3.7 billion in October 2002, compared with a slightly larger surplus of EUR 4.1 billion in October 2001. This development mainly resulted from the rise in the income and current transfers deficits that more than offset the increase in the services surplus, while the goods surplus grew only marginally between October 2001 and October 2002. Turning to month-on-month developments on the basis of seasonally adjusted data, the current account was in balance in October 2002, compared with a surplus of EUR 8.0 billion the month before. All four items of the current account contributed to this development. The value of goods exports in October was slightly below its September level, while imports of goods rose by 2.7% over the same period, thereby resulting in a decrease in the goods surplus (from EUR 11.9 billion to EUR 8.3 billion). The services surplus also declined, by EUR 2.3 billion, mainly on account of a decrease in the value of exports of services by 6.2%. The deficits for income and current transfers both increased between September and October, by EUR 0.8 billion and EUR 1.3 billion respectively. The net outflows in direct investment in October stem from both net outflows in equity capital of EUR 1.1 billion and net outflows in other capital (mostly inter-company loans) of EUR 4.0 billion. When cumulated over the first ten months of the year, combined direct and portfolio investment recorded a shift from net outflows of EUR 79.8 billion in 2001 to net inflows of EUR 39.5 billion in the same period in 2002. Moreover, in recent months overall changes in portfolio flows have been increasingly influenced by flows in debt instruments and no longer primarily by developments in equity portfolio investment, as in most of 2001 and in early 2002. The ECB compiles balance of payments statistics for the euro area on the basis of the data on transactions with residents of countries outside the euro area, as reported by euro area Member States. The methodology used was developed in close co-operation with the European Commission (Eurostat), which publishes the balance of payments for the European Union (   ).

ECB Monthly Bulletin

Annexes

. A detailed methodological note is also 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 (Euro 12). Reproduction is permitted provided that the source is acknowledged