Euro area balance of payments(monthly developments in february 2004and revised data since 2001)

The seasonally adjusted current account of the euro area showed a surplus of EUR 5.4 billion in February 2004 (a surplus of EUR 5.8 billion in non-seasonally adjusted terms). This reflected surpluses in both goods (EUR 10.9 billion) and services (EUR 1.3 billion), which were partly offset by deficits in income (EUR 1.2 billion) and current transfers (EUR 5.5 billion).

Compared with the revised data for January 2004, the seasonally adjusted current account surplus increased by EUR 1.7 billion in February 2004, mainly as a result of a EUR 3.1 billion reduction in the income deficit. This development was partly counterbalanced by decreases in the surpluses of both goods and services, while the current transfers deficit remained broadly unchanged.

The 12-month cumulated current account surplus of the euro area up to February 2004 amounted to EUR 31.1 billion, i.e. about 0.4% of GDP, compared with EUR 48.3 billion a year earlier. This mainly resulted from a decline in the goods surplus (reflecting lower exports). The rise in the current transfers deficit was counterbalanced by the decrease in the income deficit, while the services surplus remained broadly unchanged.

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 12.2 billion in February 2004, reflecting net inflows in both direct investment (EUR 7.8 billion) and portfolio investment (EUR 4.4 billion).

The developments in direct investment were mostly accounted for by net inflows in other capital (mostly inter-company loans), amounting to EUR 8.9 billion. In particular, non-resident companies increased the loans to their affiliates in the euro area by EUR 10.8 billion.

In portfolio investment, net inflows of EUR 4.4 billion resulted from net purchases of euro area bonds and notes by non-residents that exceeded net purchases of foreign money market instruments by euro area residents. Net equity flows were balanced in February.

Other investment recorded net outflows of EUR 11.5 billion in February 2004, mainly as a result of a net increase by EUR 8.0 billion in the external long-term assets held by euro area monetary financial institutions excluding the Eurosystem.

Reserve assets decreased by EUR 9.0 billion in February 2004 (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 298.5 billion at the end of February 2004 (Template on international reserves and foreign currency liquidity).

Regarding the sectoral breakdown available for portfolio investment assets in the last quarter of 2003, most of the euro area net purchases in foreign equity were done by non-MFIs, while euro area MFIs mainly invested in short-term foreign debt securities.

In the 12-month period up to February 2004, combined direct and portfolio investment recorded cumulated net inflows of EUR 1.8 billion, compared with EUR 159.1 billion a year earlier. This mainly resulted from lower net inflows in portfolio investment due, in particular, to an increase in investment by euro area residents in both foreign equity and debt securities. Direct investment recorded a shift to net outflows (of EUR 24.9 billion) from net inflows (of EUR 9.6 billion) over the same period, mainly because of the net redemption of inter-company loans by euro area affiliates of foreign companies.

In addition to the monthly data for February 2004, this press release incorporates additional breakdowns for the fourth quarter of 2003, as well as a revised set of balance of payments statistics for 2001, 2002 and 2003.

Revisions have increased the euro area current account deficit in 2001 (from EUR 14.5 billion to EUR 16.7 billion), and decreased the surpluses in both 2002 (from EUR 67.0 billion to EUR 54.5 billion) and 2003 (from EUR 28.5 billion to EUR 26.1 billion). The main revision related to the 2002 income from direct investment.

In the financial account, the main change consisted of a decrease in net foreign direct investment outflows in 2002 (from EUR 41.5 billion to EUR 4.7 billion) and 2003 (from EUR 19.5 billion to EUR 9.9 billion). This was mainly due to revised estimates of equity and reinvested earnings transactions by the non-MFI sector. In addition, an adjustment has been made in the other investment liabilities of the Eurosystem in 2003, related to an increase in the estimated euro banknotes holdings by non-residents. On balance, these revisions substantially reduced the errors and omissions for 2002 and 2003.

The European Central Bank and the European Commission (Eurostat) both issue press releases on the same day on the quarterly balance of payments for the euro area and the EU15 (Eurostat’s Euro-indicators News Releases). 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 EU. 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 EU are compiled on the basis of transactions with residents of countries outside the euro area and the European Union respectively.

A complete set of updated euro area balance of payments statistics is available on the ECB’s website in the “Statistics” section under the heading “Latest monetary, financial markets and balance of payments statistics (includes release schedules)”. The results up to February 2004 will also be published in the May 2004 issue of the ECB’s ECB Monthly Bulletin and the Statistics Pocketbook. A detailed methodological note is available on the ECB’s website. The next press release on euro area balance of payments will be published on 26 May 2004.

Table 1: Euro area current account – seasonally adjusted data.

Table 2: Monthly balance of payments of the euro area – non-seasonally adjusted data.

Table 3: Quarterly balance of payments of the euro area.