Euro area balance of payments (December 2006 and preliminary overall results for 2006)

In December 2006 the seasonally adjusted current account of the euro area showed a surplus of EUR 2.3 billion. In the financial account, combined direct and portfolio investment showed net inflows of EUR 11 billion.

For 2006 as a whole, the deficit on the euro area current account amounted to EUR 16.2 billion (about 0.2% of GDP), compared with a deficit of EUR 6.8 billion in 2005. Combined direct and portfolio investment recorded net inflows of EUR 109 billion in 2006, a shift from net outflows of EUR 45 billion in 2005, mainly as a result of higher net purchases of euro area bonds and notes and higher net direct investment in the euro area by non-resident investors.

The working day and seasonally adjusted current account of the euro area recorded a surplus of EUR 2.3 billion in December 2006 (corresponding to a surplus of EUR 5.0 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 3.3 billion), services (EUR 3.0 billion) and income (EUR 1.4 billion) that were partly offset by a deficit in current transfers (EUR 5.3 billion).

In 2006 as a whole, the working day-adjusted deficit on the euro area current account amounted to EUR 16.2 billion, i.e. around 0.2% of GDP, compared with a deficit of EUR 6.8 billion in 2005 (about 0.1% of GDP). This development was mainly due to a decrease in the goods surplus (from EUR 47.9 billion to EUR 27.7 billion), which was partly counterbalanced by a decrease in the income deficit (from EUR 21.7 billion to EUR 7.6 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 11 billion in December 2006, reflecting net inflows in portfolio investment (EUR 40 billion) and net outflows in direct investment (EUR 28 billion).

The net outflows in direct investment resulted mainly from net outflows in equity capital and reinvested earnings (EUR 20 billion), while portfolio investment recorded net inflows in both equity (EUR 29 billion) and debt instruments (EUR 11 billion).

Other investment recorded net outflows of EUR 36 billion, mainly as a result of net outflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 71 billion).

Reserve assets increased by EUR 4 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 326 billion at the end of December 2006.

In 2006 as a whole, combined direct and portfolio investment showed net inflows of EUR 109 billion, compared with net outflows of EUR 45 billion in 2005. This shift resulted from both higher net inflows in portfolio investment (from EUR 157 billion to EUR 255 billion) and lower net outflows in direct investment (from EUR 202 billion to EUR 146 billion). The increase in net inflows in portfolio investment reflected mainly higher net purchases of euro area bonds and notes by non-resident investors. The decrease in net outflows in direct investment was predominantly caused by higher net investment in the euro area by foreign corporations.

In addition to the balance of payments for December 2006, this press release incorporates revisions for November 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 December 2006 will also be published in the March 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 23 March 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.