Euro area balance of payments (May 2007)

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 8.6 billion as deficits in income and current transfers exceeded surpluses in goods and services. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 4 billion, reflecting net outflows in direct investment that were partially offset by net inflows in portfolio investment.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 8.6 billion in May 2007 (corresponding to a deficit of EUR 14.6 billion in non-seasonally adjusted terms). This reflected deficits in income (EUR 9.6 billion) and current transfers (EUR 4.6 billion) that were partly counterbalanced by surpluses in goods (EUR 3.5 billion) and services (EUR 2.2 billion).

The 12-month cumulated, working day-adjusted current account up to May 2007 was close to balance, compared with a deficit of EUR 28.1 billion a year earlier. This mainly resulted from an increase in the goods surplus (by EUR 24.1 billion) and a reduction in the income deficit (by EUR 10.4 billion).

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 4 billion in May 2007, reflecting net outflows in direct investment (EUR 11 billion) that were partially offset by net inflows in portfolio investment (EUR 7 billion).

The developments in direct investment were accounted for by net outflows in both equity capital and reinvested earnings (EUR 4 billion) and other capital (mostly inter-company loans) (EUR 8 billion).

The portfolio investment account reflected net inflows in equity (EUR 10 billion) and money market instruments (EUR 7 billion), which were partly counterbalanced by net outflows in bonds and notes (EUR 10 billions). The equity inflows were mainly accounted for by net purchases of euro area securities by non-residents (EUR 12 billion).

Other investment recorded net inflows of EUR 8 billion, mainly as a result of net inflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 49 billion), which were partially offset by net outflows in other sectors (EUR 33 billion), general government (EUR 5 billion) and the Eurosystem (EUR 3 billion).

Reserve assets increased by EUR 1 billion (excluding valuation effects). At the end of May 2007 the stock of the Eurosystem’s reserve assets stood at EUR 327 billion.

In the 12-month period to May 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 177 billion, compared with net outflows of EUR 4 billion a year earlier. This shift mainly resulted from higher net inflows in portfolio investment (from EUR 191 billion to EUR 356 billion) and, to a lesser extent, from lower net outflows in direct investment (from EUR 194 billion to EUR 179 billion). The developments in portfolio investment largely reflected higher purchases of euro area bonds and notes by non-residents (from EUR 286 billion to EUR 507 billion).

In addition to the balance of payments for May 2007, this press release incorporates revisions for April 2007. Those revisions have not significantly affected the previously published data.

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”. These data, as well as the euro area data according to the composition of the euro area during the reference period, can be downloaded using the ECB’s Statistical Data Warehouse (SDW). Results up to May 2007 will also be published in the August 2007 issues of the ECB’s Monthly Bulletin and the Statistics Pocket Book. 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 22 August 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.