Euro area balance of payments (April 2006)

In April 2006 the seasonally adjusted current account of the euro area was in balance since the surpluses in goods, services and income were offset by the deficit in current transfers. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 8 billion, predominantly reflecting net outflows in equity portfolio investment.

The seasonally adjusted current account of the euro area was in balance in April 2006 (corresponding to a deficit of EUR 8.0 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 0.9 billion), services (EUR 3.1 billion) and income (EUR 2.3 billion) that were offset by a deficit in current transfers (EUR 6.2 billion).

The 12-month cumulated current account up to April 2006 recorded a deficit of EUR 35.3 billion, i.e. around 0.4% of GDP, compared with a surplus of EUR 32.6 billion a year earlier. This shift resulted mainly from a decline of EUR 54.6 billion in the goods surplus, reflecting an increase in the value of imports higher than the increase in the value of exports. The deficits in income and current transfers also increased over the same period.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 8 billion in April 2006, reflecting net outflows in both direct investment (EUR 3 billion) and portfolio investment (EUR 6 billion).

Within direct investment, net outflows of EUR 4 billion in other capital (mostly inter-company loans) were only partly offset by net inflows of EUR 2 billion in equity capital and reinvested earnings.

Within portfolio investment, net outflows in equity (EUR 14 billion) were partly counterbalanced by net inflows in debt instruments (EUR 8 billion). The net outflows in equity were due to both net sales of euro area securities by non-residents (EUR 10 billion) and net purchases of foreign securities by euro area residents (EUR 4 billion).

Other investment recorded net inflows of EUR 18 billion, mainly as a result of net inflows in MFIs excluding the Eurosystem (EUR 17 billion).

Reserve assets increased by EUR 1.2 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 336.8 billion at the end of April 2006.

In the 12-month period up to April 2006, combined direct and portfolio investment showed cumulated net inflows of EUR 67 billion, compared with net outflows of EUR 5 billion a year earlier. This development resulted from higher net inflows in portfolio investment (increasing from EUR 52 billion to EUR 190 billion) that were only partly offset by rising net outflows in direct investment (increasing from EUR 56 billion to EUR 122 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 higher investment abroad by euro area residents and lower investment in the euro area by non-residents.

In addition to the balance of payments for April 2006, this press release incorporates revisions for March 2006. These revisions have not significantly altered the previously 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 July 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 July 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.