Euro area balance of payments (March 2006)

In March 2006 the seasonally adjusted current account of the euro area recorded a deficit of EUR 3.2 billion since the deficits in current transfers and income exceeded the surpluses in goods and services. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 57 billion, predominantly reflecting net purchases of euro area equity securities by non-residents.

The seasonally adjusted current account of the euro area showed a deficit of EUR 3.2 billion in March 2006 (corresponding to a deficit of EUR 1.3 billion in non-seasonally adjusted terms). This reflected deficits in both current transfers (EUR 4.7 billion) and income (EUR 2.7 billion) that were only partly offset by surpluses in goods (EUR 2.4 billion) and services (EUR 1.9 billion).

The 12-month cumulated current account up to March 2006 recorded a deficit of EUR 36.8 billion, i.e. around 0.5% of GDP, compared with a surplus of EUR 37.8 billion a year earlier. This shift mainly resulted from a decline of EUR 54.9 billion in the goods surplus, reflecting that the increase in the value of imports was higher than that of exports. The income deficit rose as well, by EUR 20.2 billion to EUR 43.7 billion.

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 57 billion in March 2006, reflecting net inflows in both direct investment (EUR 8 billion) and portfolio investment (EUR 49 billion).

Within direct investment, net inflows of EUR 14 billion in other capital (mostly inter-company loans) were only partly offset by net outflows of EUR 6 billion in equity capital and reinvested earnings.

Within portfolio investment, equity and debt instruments recorded net inflows of EUR 40 billion and EUR 9 billion, respectively. The net inflows in equity were mainly due to net purchases of euro area equity securities by non-residents (EUR 52 billion).

Other investment recorded net outflows of EUR 25 billion, mainly as a result of net outflows in other sectors (EUR 25 billion).

Reserve assets decreased by EUR 6 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 327 billion at the end of March 2006.

In the 12-month period up to March 2006, combined direct and portfolio investment showed cumulated net inflows of EUR 53 billion, compared with net inflows of EUR 11 billion a year earlier. This development resulted from higher net inflows in portfolio investment (increasing from EUR 54 billion to EUR 188 billion) that were only partly offset by rising net outflows in direct investment (increasing from EUR 43 billion to EUR 135 billion). The increase in net portfolio investment inflows mainly reflected higher net purchases of euro area equities by non-residents. Net outflows in direct investment increased on account of both lower investment in the euro area by non-residents and higher investment abroad by euro area residents.

In addition to the monthly balance of payments for March 2006, this press release incorporates some revisions for February 2006. These revisions have not significantly altered the already published statistics.

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 March 2006 will also be published in the June 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 26 June 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.