Euro area balance of payments (January 2006)

In January 2006 the seasonally adjusted current account of the euro area recorded a deficit of EUR 3.3 billion. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 33 billion, predominantly reflecting net purchases of foreign bonds and notes by euro area residents.

The seasonally adjusted current account of the euro area showed a deficit of EUR 3.3 billion in January 2006 (corresponding to a deficit of EUR 11.3 billion in non-seasonally adjusted terms). This reflected a deficit in current transfers (EUR 4.9 billion) which was only partly offset by the surplus in services (EUR 2.2 billion). The goods and income accounts were almost balanced.

The 12-month cumulated current account up to January 2006 recorded a deficit of EUR 30.2 billion, i.e. around 0.4% of GDP, compared with a surplus of EUR 39.1 billion (around 0.5% of GDP) a year earlier. This shift mainly resulted from a decline of EUR 51.4 billion in the goods surplus, reflecting an increase in the value of imports which exceeded that of exports. The income deficit also widened by EUR 17.7 billion, as income payments grew more rapidly than income receipts.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 33 billion in January 2006, reflecting net outflows in portfolio investment (EUR 38 billion) that were partially compensated by net inflows in direct investment (EUR 5 billion).

In direct investment, net inflows of EUR 12 billion in equity capital and reinvested earnings were only partly offset by net outflows of EUR 7 billion in other capital (mostly inter-company loans). The net inflows were related to both net disinvestment abroad by euro area companies and net investment in the euro area by foreign companies.

In portfolio investment, both equity and debt instruments recorded net outflows, of EUR 8 billion and EUR 30 billion respectively. The net outflows in debt instruments were mainly due to net purchases of foreign bonds and notes by euro area residents (EUR 34 billion), as well as net sales of euro area bonds and notes by foreigners (EUR 5 billion).

Other investment recorded net inflows of EUR 25 billion, as a result of net inflows in monetary financial institutions (MFIs) excluding the Eurosystem (EUR 46 billion) and in the Eurosystem (EUR 8 billion), which were partly offset by net outflows in general government (EUR 1 billion) and in other sectors, i.e. non-financial corporations and households (EUR 28 billion).

Reserve assets decreased by EUR 2 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 332 billion at the end of January 2006.

In the 12-month period up to January 2006, combined direct and portfolio investment showed cumulated net outflows of EUR 14 billion, compared with net inflows of EUR 3 billion a year earlier. This shift resulted from higher net outflows in direct investment (increasing from EUR 48 billion to EUR 138 billion) that were only partly offset by rising net inflows in portfolio investment (increasing from EUR 51 billion to EUR 124 billion). Net outflows in direct investment increased on account of both higher levels of investment abroad by euro area residents and a fall in investment in the euro area by non-residents. The increase in net portfolio investment inflows mainly resulted from a higher net purchase of euro area equities by non-residents.

In addition to the monthly balance of payments data for January 2006, this press release incorporates some revisions for December 2005. These revisions have not significantly altered the data already published.

A complete set of updated euro area balance of payments and international investment position statistics is available on the ECB’s website in the “Statistics” section under the heading “Data services”/“Latest monetary, financial markets and balance of payments statistics”. The results up to January 2006 will also be published in the April 2006 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 monthly balance of payments will be published on 25 April 2006.

Table 1: Current account of the euro area – seasonally adjusted data.

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