Euro area balance of payments (October 2006)

In October 2006 the seasonally adjusted current account of the euro area was in balance, as surpluses in goods, services and income offset the deficit in current transfers. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 10 billion, reflecting net inflows in portfolio investment which were partly offset by net outflows in direct investment. Net inflows in portfolio investment were mainly driven by net purchases of euro area debt instruments by non-residents.

The working day and seasonally adjusted current account of the euro area was in balance in October 2006 (and close to balance in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 2.7 billion), services (EUR 2.0 billion) and income (EUR 3.1 billion) that offset a deficit in current transfers (EUR 7.8 billion).

The 12-month cumulated current account up to October 2006 recorded a deficit of EUR 22.6 billion, i.e. around 0.3% of GDP, compared with a surplus of EUR 14.2 billion a year earlier. This shift mainly resulted from a decrease in the goods surplus (by EUR 39.8 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 10 billion in October 2006, reflecting net inflows in portfolio investment (EUR 23 billion) and net outflows in direct investment (EUR 13 billion).

Within direct investment, the net outflows mainly resulted from net outflows in equity capital and reinvested earnings (EUR 12 billion), while portfolio investment recorded net inflows in both equity (EUR 10 billion) and debt instruments (EUR 13 billion).

Other investment recorded net outflows of EUR 18 billion as a result of net outflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 17 billion) and by general government (EUR 4 billion), which were only partly compensated by net inflows in other sectors (EUR 3 billion).

Changes in reserve assets were negligible (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 326 billion at the end of October 2006.

In the 12-month period to October 2006, combined direct and portfolio investment showed cumulated net inflows of EUR 2 billion, compared with net inflows of EUR 34 billion a year earlier. This development resulted from lower net inflows in portfolio investment (from EUR 221 billion to EUR 121 billion) that were only partly counterbalanced by lower net outflows in direct investment (from EUR 187 billion to EUR 118 billion). The decrease in net inflows in portfolio investment reflected declining net inflows in equity and a shift from net inflows to net outflows in debt securities. The decrease in net outflows in direct investment was predominantly the consequence of higher net investment in the euro area by foreign corporations.

In addition to the balance of payments for October 2006, this press release incorporates revisions for September 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 headings “Data services”/“Latest monetary, financial markets and balance of payments statistics”.

The data can also be downloaded using the ECB’s Statistical Data Warehouse (SDW) at http://sdw.ecb.int.

Results up to October 2006 will also be published in the January 2007 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 January 2007.

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

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