Euro area balance of payments in October 2011

In October 2011 the seasonally adjusted current account of the euro area recorded a deficit of €7.5 billion. In the financial account, combined direct and portfolio investment recorded net outflows of €32.1 billion (non-seasonally adjusted).

Current account

The seasonally adjusted current account of the euro area recorded a deficit of €7.5 billion in October 2011 (see Table 1). This reflected deficits for current transfers (€6.9 billion), goods (€4.4 billion) and income (€1.2 billion), which were partially offset by a surplus for services (€5.0 billion).

The seasonally adjusted 12-month cumulated current account recorded a deficit of €58.7 billion in October 2011 (around 0.6% of euro area GDP; see Table 1 and Chart 1), compared with a deficit of €29.5 billion a year earlier. The widening of the current account deficit resulted predominantly from a shift in the balance for goods from a surplus (€20.3 billion) to a deficit (€14.4 billion).

Financial account

In the financial account (see Table 2), combined direct and portfolio investment recorded net outflows of €32 billion in October 2011. This was due to net outflows for both portfolio investment (€25 billion) and direct investment (€7 billion).

The net outflows for direct investment resulted mainly from net outflows in equity capital and reinvested earnings (€9 billion).

Portfolio investment recorded net outflows for debt instruments (€25 billion), while the net flows for equity were balanced. These net outflows resulted mainly from a reduction of euro area debt instruments held by residents outside the euro area (€53 billion), reflecting, among other factors, the transfer to the United Kingdom of bonds and notes originally issued in the euro area as a result of the restructuring of a banking group. These net outflows were partially compensated for by net sales of foreign debt instruments by euro area residents (€25 billion) , in particular bonds and notes (€28 billion).

The financial derivatives account was balanced.

Other investment recorded net inflows of €25 billion, reflecting net inflows for MFIs excluding the Eurosystem (€39 billion), which were partly offset by net outflows for the Eurosystem (€6 billion), other sectors (€5 billion) and the general government (€4 billion). The net inflows for MFIs excluding the Eurosystem also reflect the transfer of funds linked to the restructuring of the aforementioned banking group.

The Eurosystem’s stock of reserve assets increased from €647 billion to €652 billion in October 2011, mainly on account of valuation effects (with net transactions resulting in an increase of €1 billion).

In the 12-month period to October 2011 combined direct and portfolio investment recorded cumulated net inflows of €340 billion, compared with net inflows of €16 billion in the preceding 12-month period. This increase was due to a shift in direct investment from net outflows (€141 billion) to net inflows (€35 billion) and to higher net inflows for portfolio investment (€305 billion, up from €156 billion). The higher net inflows for portfolio investment mainly reflected higher net inflows in debt instruments (€238 billion, up from €35 billion). The shift in direct investment resulted mainly from lower net outflows in other capital (mostly inter-company loans), which were close to balance (after outflows of €218 billion).

Data revisions

This press release incorporates revisions to the data for September 2011. These revisions have not significantly changed the previously published data.

Additional information on the euro area balance of payments and international investment position

In this press release, the seasonally adjusted current account refers to working day and seasonally adjusted data. Data for the financial account are not working day or seasonally adjusted.

In line with the agreed allocation of responsibilities, the European Central Bank compiles and disseminates monthly and quarterly balance of payments statistics for the euro area, whereas the European Commission (Eurostat; see news releases for “Euro-indicators”) focuses on quarterly and annual aggregates for the European Union. These data comply with international standards, particularly those set out in the IMF’s Balance of Payments Manual (fifth edition). The aggregates for the euro area and the European Union are compiled consistently on the basis of transactions and positions vis-à-vis residents of countries outside the euro area and the European Union respectively.

A complete set of updated euro area balance of payments statistics (including a quarterly geographical breakdown for the main counterparts) and international investment position statistics is available in the “Statistics” section of the ECB’s website under the headings “Data services”/“Latest monetary, financial markets and balance of payments statistics”. These data, as well as historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW). Data up to October 2011 will also be published in the January 2012 issues of the ECB’s Monthly Bulletin and Statistics Pocket Book. Detailed methodological notes are available on the ECB’s website. The next press release on the euro area monthly and quarterly balance of payments will be published on 19 January 2012, together with the quarterly international investment position.

Annexes

Table 1: Current account of the euro area

Table 2: Monthly balance of payments of the euro area