Euro area balance of payments (January 2008)

In January 2008 the working day and seasonally adjusted current account of the euro area showed a deficit of EUR 10.6 billion. In the financial account, combined direct and portfolio investment showed net inflows of EUR 22 billion.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 10.6 billion in January 2008 (corresponding to a deficit of EUR 19.1 billion in non-seasonally adjusted terms). This reflected deficits in current transfers (EUR 10.3 billion) and income (EUR 4.7 billion), which were only partly compensated for by a surplus in services (EUR 4.2 billion). The goods account was balanced.

The 12-month cumulated, working day-adjusted current account up to January 2008 recorded a surplus of EUR 1.3 billion, compared with a deficit of EUR 11.6 billion a year earlier. This change resulted mainly from increases in the surpluses in goods (from EUR 21.7 billion to EUR 52.1 billion) and services (from EUR 39.0 billion to EUR 48.5 billion), which were partly compensated for by an increase in the current transfers deficit (from EUR 75.0 billion to EUR 90.3 billion) and by a shift in the income account from a surplus (EUR 2.7 billion) to a deficit (EUR 9.0 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 22 billion in January 2008, reflecting net inflows in portfolio investment (EUR 54 billion) and net outflows in direct investment (EUR 32 billion).

The net outflows in direct investment resulted mainly from net outflows in equity capital and reinvested earnings (EUR 26 billion), which were recorded, in particular, in investments of euro area resident units abroad (EUR 33 billion).

Portfolio investment recorded net inflows in equity (EUR 56 billion), reflecting both net purchases of euro area securities by non-residents (EUR 37 billion) and net sales of foreign securities by euro area residents (EUR 19 billion). Net inflows in bonds and notes (EUR 28 billion) reflected mainly net purchases of euro area securities by non-residents (EUR 24 billion). Net outflows in money market instruments (EUR 30 billion) were mainly accounted for by net purchases of foreign securities by euro area residents (EUR 36 billion)

Financial derivatives recorded net outflows of EUR 13 billion. Other investment recorded net inflows of EUR 26 billion, mainly as a result of net inflows in MFIs excluding the Eurosystem (EUR 12 billion), general government (EUR 8 billion) and the Eurosystem (EUR 4 billion).

Reserve assets increased by EUR 7 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 375 billion at the end of January 2008.

In the 12-month period to January 2008, combined direct and portfolio investment showed cumulated net inflows of EUR 119 billion, compared with net inflows of EUR 214 billion a year earlier. This development largely resulted from a decrease in net inflows in portfolio investment (from EUR 356 billion to EUR 246 billion), which, in turn, mainly reflected lower net purchases of euro area bonds and notes by non-resident investors.

When Cyprus and Malta adopted the euro on 1 January 2008, their economic agents became euro area residents. Thus, for the first time, this press release shows consistent time series of the balance of payments for the enlarged euro area, also including the period before 2008. For the earlier data, the changes to the euro area external statistics involve: (i) the inclusion of transactions between residents in Cyprus and Malta and non-euro area residents; and (ii) the exclusion of transactions between euro area residents and residents in Cyprus and Malta. In addition, the related international investment position statistics have been recalculated to take into account the enlargement of the euro area (available on the ECB’s website). In general, the accession of Cyprus and Malta has had a minor impact on the overall euro area results: for example, the working day adjusted current account surplus in 2007 has decreased by EUR 0.5 billion.

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 historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW). Results up to January 2008 will also be published in the April 2008 issues of the ECB’s Monthly Bulletin and 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 24 April 2008.

Annexes

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.