Euro area balance of payments (February 2006)

In February 2006 the seasonally adjusted current account of the euro area recorded a deficit of EUR 5.6 billion, mainly reflecting a deficit in current transfers. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 6 billion since net outflows in direct investment were partially counterbalanced by net inflows in portfolio investment.

The seasonally adjusted current account of the euro area showed a deficit of EUR 5.6 billion in February 2006 (corresponding to a deficit of EUR 1.8 billion in non-seasonally adjusted terms). This reflected deficits in both current transfers (EUR 6.0 billion) and income (EUR 2.7 billion), which were only partially offset by the surpluses in services (EUR 2.6 billion) and in goods (EUR 0.5 billion).

The 12-month cumulated current account up to February 2006 recorded a deficit of EUR 33.3 billion, i.e. around 0.4% of GDP, compared with a surplus of EUR 43.7 billion a year earlier (around 0.5% of GDP). This shift mainly resulted from a decline of EUR 57.4 billion in the goods surplus, reflecting that the increase in the value of imports was higher than that of exports. The deficits in income and current transfers also increased by EUR 16.7 billion and EUR 5.2 billion respectively.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 6 billion in February 2006, reflecting net outflows in direct investment (EUR 26 billion) that were partially offset by net inflows in portfolio investment (EUR 20 billion).

In direct investment, the net outflows resulted predominantly from net outflows in equity capital and reinvested earnings (EUR 24 billion) as investment abroad by euro area companies (EUR 29 billion) largely exceeded investment in the euro area by foreign companies (EUR 5 billion).

The net inflows in portfolio investment were accounted for by net inflows in equity securities (EUR 11 billion) and in money market instruments (EUR 15 billion), which were partly compensated for by net outflows in bonds and notes (EUR 5 billion).

Other investment recorded net inflows of EUR 19 billion, as a result of net inflows in monetary financial institutions (MFIs) excluding the Eurosystem (EUR 34 billion), which were partly offset by net outflows in the Eurosystem (EUR 4 billion) and in other sectors, i.e. non-financial corporations and households (EUR 11 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 February 2006.

In the 12-month period up to February 2006, combined direct and portfolio investment showed cumulated net outflows of EUR 15 billion, compared with net outflows of EUR 2 billion a year earlier. This development resulted from higher net outflows in direct investment (increasing from EUR 60 billion to EUR 152 billion) that were only partly offset by rising net inflows in portfolio investment (increasing from EUR 58 billion to EUR 137 billion). Net outflows in direct investment increased on account of both higher 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 higher net purchases of euro area equities by non-residents.

Besides the monthly balance of payments data for February 2006, this press release incorporates revisions since January 2003.

In the current account, the revisions focused mainly on income in 2004 and 2005 and were due to new results in reinvested earnings. In particular, revisions reduced the income deficits in 2004 (from EUR 33.1 billion to EUR 28.0 billion) and in 2005 (from EUR 52.0 billion to EUR 41.5 billion).

In the financial account, revisions affected mainly the data for 2005, especially inflows in portfolio investment (revised from EUR 145 billion to EUR 163 billion) and other investment (revised from EUR 50 billion to EUR 68 billion).

In addition, data from 1999 onwards were revised to incorporate methodological changes implemented in a euro area country. In particular, the recording of goods now excludes the value of the goods to be repaired; although the levels of both exports and imports decreased before 2003, the impact on the goods surplus was not significant.

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 February 2006 will also be published in the May 2006 issue of the ECB’s Monthly Bulletin. A detailed methodological note is available on the ECB’s website. A separate press release on the euro area balance of payments (including a geographical breakdown) and international investment position will be published on 28 April 2006. The next press release on the euro area monthly balance of payments will be published on 29 May 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.