Monthly developments in June 2001

During the first half of 2001, the cumulated current account deficit declined to EUR 11.2 billion, i.e. EUR 9.5 billion lower than the corresponding period last year. Again, this is mainly due to a considerable increase in the cumulated goods surplus (to EUR 26.3 billion, from EUR 11.9 billion), which was only partially offset by increases in the deficits for income and current transfers of EUR 4.3 billion and EUR 0.9 billion respectively. Meanwhile, the deficit for services remained virtually unchanged. The rising cumulated goods surplus is explained by faster growth of exports (13.3%) than of imports (10.4%). In the financial account, combined direct and portfolio investment recorded net inflows in June (EUR 19.8 billion), compared with net outflows in May (EUR 15.5 billion) as well as in the previous months of 2001. This turnaround in the direction of flows in June mainly reflects strong foreign investment in euro area securities. Portfolio investment reported net inflows of EUR 27.7 billion in June 2001. In particular, as in May, there were significant net equity inflows in portfolio equity (EUR 25.5 billion). Also, debt instruments displayed net inflows in June (EUR 2.2 billion). The disinvestment by foreign investors in both euro area bonds and notes and money market instruments, observed in both April and May, was reversed in June 2001. In the first half of 2001, net outflows in combined net direct and portfolio investment were much higher (EUR 97.6 billion) than in the corresponding period of the previous year (EUR 7.9 billion). This development mainly reflects a swing in direct investment from net inflows in 2000 (EUR 129.6 billion) to net outflows in 2001 (EUR 91.1 billion) that was not offset by the decline in portfolio net outflows (from EUR 137.5 billion to EUR 6.5 billion). Around half of the net direct investment outflows in the first half of 2001 were related to "other capital", which mainly involves inter-company loans.

Note on balance of payments statistics produced by the Eurosystem

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Annex

The current account deficit of the euro area decreased marginally to EUR 0.8 billion in June 2001, from EUR 1.3 billion in June 2000. Although the goods surplus more than doubled (to EUR 8.3 billion, from EUR 4.0 billion), this was virtually offset by a slight fall in the surplus for services (to EUR 0.5 billion, from EUR 1.3 billion) combined with increases in the deficits for both income and current transfers (to EUR 3.2 billion, from EUR 1.5 billion for income, and to EUR 6.4 billion, from EUR 5.1 billion for transfers). Seasonally adjusted data for the current account provide further insights into the above movements and also give a clearer picture of recent monthly trends. According to these data, both export and import values of goods grew strongly during the second half of last year, but both stagnated in the first half of 2001; indeed imports in recent months have been below their levels of late 2000. As regards imports of goods, the stagnation seems to be partly due to the deceleration in euro area domestic demand as well as the fall in import prices in the first part of 2001 (the latter being largely due to the decrease in oil prices). Exports of goods have stopped growing primarily owing to the marked slowdown in foreign demand. Direct investment recorded net outflows of EUR 7.9 billion in June 2001. This is less than half of the average monthly net outflows in the first five months of 2001 and reflects mainly a muted level of direct investment abroad by euro area residents (EUR 18.0 billion). Direct investment in the euro area was EUR 10.0 billion, which is basically in line with previous months' figures. Elsewhere in the financial account, net outflows in financial derivatives amounted to EUR 5.0 billion in June 2001. Net outflows in other investment amounted to EUR 29.5 billion. Reserve assets increased by EUR 0.8 billion in June 2001 (excluding valuation effects). Errors and omissions amounted to EUR 15.5 billion in June 2001, and to EUR 0.2 billion in the first six months of 2001. The methodology used was developed in close co-operation with the European Commission (Eurostat) which publishes the Balance of Payments for the European Union (   ). The ECB compiles these statistics on the basis of the data on extra-euro area transactions reported by euro area countries. The results for June 2001 will also be published in the September 2001 issue of the . A detailed methodological note is available on the ECB's website.

Annex 1 Annex 2

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to this press release contains statistics produced by the Eurosystem for the monthly balance of payments of the euro area for 2000 and 2001 (Euro 12 data); contains the seasonally adjusted current account data for Euro 12. Reproduction is permitted provided that the source is acknowledged