Euro area balance of payments (Monthly developments in November 2004)

In November 2004 the seasonally adjusted current account of the euro area was close to balance, as surpluses in goods and services were almost entirely offset by deficits in income and current transfers. In the financial account, combined direct and portfolio investment recorded net outflows that predominantly reflected net purchases of foreign debt securities by euro area residents.

The 12-month cumulated surplus of the euro area current account up to November 2004 amounted to EUR 38.8 billion , i.e. around 0.5% of GDP, as compared with EUR 24.6 billion a year earlier . This increase resulted from a higher surplus for services as well as from a lower deficit in income and current transfers . The surplus for goods remained almost unchanged.

The balanced foreign direct investment largely resulted from net outflows in equity capital and reinvested earnings by euro area corporations (EUR 13.4 billion) being compensated by investments in the euro area by foreign corporations in both equity capital and reinvested earnings (EUR 5.6 billion), and other capital (EUR 6.1 billion) – mostly inter-company loans.

In portfolio investment , the net outflows of EUR 10.5 billion resulted from net outflows in debt instruments (EUR 14.5 billion) that were partly offset by net inflows in equity securities (EUR 4.1 billion). Specifically, euro area investors bought (in net terms) foreign money market instruments (EUR 12.2 billion), while foreigners were net sellers of such euro area securities (EUR 5.0 billion) .

Other investment recorded net inflows of EUR 39.9 billion, mainly as a result of net inflows on the part of monetary financial institutions (MFIs) excluding the Eurosystem (EUR 36.8 billion).

Reserve assets increased by EUR 0.1 billion (excluding valuation effects). The stock of the Eurosystem's reserve assets stood at EUR 291.6 billion at the end of November 2004

Errors and omissions reached EUR -34.7 billion. This mainly reflects significant errors and omissions in a single Member State .

In the 12-month period up to November 2004, combined direct and portfolio investment recorded cumulated net outflows of EUR 61.3 billion, as compared with net inflows of EUR 71.8 billion a year earlier. This resulted from both direct investment and portfolio investment shifting to net outflows in this period. The developments in direct investment were equally accounted for by higher investment abroad and lower investment in the euro area. The switch in portfolio investment mainly reflected a shift from net purchases (EUR 42.6 billion) to net sales (EUR 12.5 billion) of euro area money market instruments by foreign residents.

A complete set of updated euro area balance of payments and international investment position statistics is available in the “Statistics” section of the ECB's website, under the heading “Data services” / “Latest monetary, financial markets and balance of payments statistics”. The results up to November 2004 will also be published in the February 2005 issue of the ECB's Monthly Bulletin. A detailed methodological note is available on the ECB’s website. The next press release on the euro area balance of payments will be published on 22 February 2005.

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