Monthly developments in November 2002 and revisions for the second and third quarters of 2002

During the first 11 months of 2002, the cumulated current account balance shifted from a deficit of EUR 16.1 billion in the same period in the previous year to a surplus of EUR 53.9 billion. This shift, which is roughly equal to 1% of euro area GDP, mostly originated from a substantial increase in the goods surplus (by EUR 56.7 billion). Furthermore, there was an increase in the services surplus (by EUR 10.7 billion) and a decline in the deficits for income and current transfers (by EUR 0.4 billion and EUR 2.2 billion respectively). The rise in the goods surplus was mainly due to a decline in goods imports (by 4.1%) combined with an increase in exports (by 2.1%). Turning to the financial account, combined direct and portfolio investment of the euro area registered net inflows of EUR 13.6 billion in November 2002. These reflected net inflows in both direct investment (EUR 3.9 billion) and portfolio investment (EUR 9.7 billion). One of the salient features of the euro area financial account in November was the substantial net inflow of EUR 16.1 billion into equity portfolio investment. This resulted from a net acquisition of euro area equities by non-residents, amounting to EUR 14.5 billion. By contrast, euro area debt instruments recorded net outflows of EUR 6.4 billion in November, reflecting net outflows in money market instruments (EUR 11.6 billion), whereas euro area bonds and notes registered net inflows of EUR 5.1 billion. By contrast, net inflows in portfolio investment of the euro area have remained relatively stable, increasing only slightly from EUR 54.1 billion to EUR 64.4 billion between 2001 and 2002. However, there was a shift in the composition of euro area portfolio investment from net inflows in equity securities to net inflows in debt instruments from 2001 to 2002. Net inflows in equity portfolio investment declined from EUR 116.6 billion in the period January-November 2001 to EUR 43.7 billion in 2002, whereas net outflows of EUR 62.4 billion in debt instruments turned into net inflows of EUR 20.7 billion over the same period.

The euro area current account registered a surplus of EUR 10.3 billion in November 2002 compared with a smaller surplus of EUR 2.7 billion in November 2001. This development resulted mainly from a EUR 4.8 billion increase in the goods surplus, and to a lesser extent from a switch in the services balance, from a EUR 0.9 billion deficit to a EUR 0.7 billion surplus, and a decrease of EUR 1.3 billion in the deficit on current transfers. The income account remained unchanged. Turning to month-on-month developments on the basis of seasonally adjusted data, the current account registered a EUR 6.8 billion surplus in November 2002 compared with a surplus of EUR 3.2 billion the month before. The increase in the goods balance, essentially reflecting a 2.4% fall in imports, was the main factor behind this development. The services surplus slightly increased over the same period, and the deficits of the income and current transfers accounts both decreased in November 2002 (by EUR 0.5 billion and EUR 0.8 billion respectively). As was the case throughout 2002, net inflows in both equity direct investment (EUR 1.3 billion) and other capital, mostly inter-company loans (EUR 2.6 billion), contributed to the overall net inflows in direct investment in November. On a cumulated basis, the euro area recorded net inflows of EUR 33.7 billion in combined direct and portfolio investment during the first 11 months of 2002, compared with net outflows of EUR 48.2 billion during the same period in 2001. This shift from net outflows to net inflows mostly reflects the decline in net outflows in the euro area direct investment account from EUR 102.3 billion in the first 11 months of 2001 to EUR 30.7 billion in 2002, and in particular the decrease of almost EUR 50 billion in capital supplied by euro area companies to their foreign subsidiaries.

Data revisions

Data revisions in the financial account statistics for the second and third quarters of 2002 mainly affected the portfolio investment account. Net inflows of portfolio investment into the euro area were revised downwards, from EUR 67.1 billion and EUR 34.5 billion for the second and third quarters respectively, to EUR 57.4 billion and EUR 29.7 billion.

In addition to the key items for November 2002, the present note incorporates a revised set of balance of payments statistics for the second and third quarters of 2002. The current account balance was revised downwards in the second quarter of 2002 by EUR 2.3 billion, and upwards in the third quarter by EUR 4.9 billion. The revision of the third quarter comes essentially from July 2002, for which goods debits were revised downwards by EUR 1.9 billion and services credits upwards by EUR 1.3 billion, resulting in a larger surplus on goods and services.

Additional information on the sharing of responsibilities regarding the compilation of the b.o.p. of the euro area and EU15

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

The European Central Bank and the European Commission (Eurostat) each disseminate a press release on the same day on the quarterly balance of payments for the euro area and the EU15 ( publishes the balance of payments for the European Union (   ). In line with the agreed allocation of responsibilities, the European Central Bank compiles and disseminates monthly and quarterly balance of payments statistics for the euro area, 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 Balance of Payments Manual (5th edition). The aggregates for the euro area and the 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.

Table 1 Table 2 Table 3

European Central Bank Press and Information Division Kaiserstrasse 29, D-60311 Frankfurt am Main Tel.: +49 69 13 44 74 55, Fax: +49 69 13 44 74 04 Internet: http://www.ecb.europa.eu

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