Monthly developments in December 2002 and preliminary overall results for 2002

For the whole of 2002, the current account balance shifted to a surplus of EUR 62.0 billion from a deficit of EUR 13.8 billion in the previous year. This shift, which amounts to approximately 1% of euro area GDP, mostly originated from a substantial increase in the goods surplus (by EUR 56.9 billion), due to a decline in goods imports (by 3.4%) combined with an increase in exports (by 2.4%). Regarding other items, the services surplus increased by EUR 12.4 billion, while the deficits for current transfers and for income declined by EUR 6.0 billion and EUR 0.5 billion respectively. Both the credit and the debit flows on the income account shrank quite strongly (by 16.4% and 14.5% respectively) in 2002. In the financial account, combined direct and portfolio investment of the euro area registered net outflows of EUR 4.3 billion in December 2002, reflecting net outflows in portfolio investment of EUR 13.9 billion and net inflows in direct investment of EUR 9.6 billion. For the whole of 2002, euro area combined direct and portfolio investment shifted from net outflows of EUR 63.4 billion in 2001 to net inflows of EUR 29.4 billion in 2002. The main factor accounting for this shift in the euro area financial account was the sizeable reduction in direct investment abroad, from EUR 255.8 billion in 2001 to EUR 151.0 billion in 2002. Furthermore, net inflows in portfolio investment increased modestly in 2002, by EUR 12.3 billion. However, this coincided with a substantial change in the composition of portfolio investment flows. Net inflows in equity portfolio investment declined significantly, from EUR 122.6 billion in 2001 to EUR 39.1 billion in 2002. By contrast, net outflows in debt instruments of the euro area of EUR 84.4 billion in 2001 turned into net inflows of EUR 11.3 billion in 2002, reflecting mainly developments in bonds and notes.

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Eurostat's Euro-indicators News Releases The results up to December 2002 will also be published in the March 2003 issue of the

The euro area current account registered a surplus of EUR 8.1 billion in December 2002, compared with a surplus of EUR 2.3 billion in December 2001. This development mainly resulted from a EUR 3.8 billion decrease in the current transfers deficit and, to a lesser extent, from a switch in the services balance, from a EUR 0.1 billion deficit to a EUR 1.7 billion surplus. The goods balance and the income balance remained broadly unchanged. Turning to month-on-month developments on the basis of seasonally adjusted data, the current account surplus rose modestly in December 2002, to EUR 7.6 billion, compared with a surplus of EUR 6.8 billion the month before. This was the result of a EUR 3.2 billion decrease in the goods surplus – reflecting a 2.2% fall in exports and a 1.7% rise in imports – being more than compensated for by a reduction in the income and current transfers deficits. The repayment of inter-company loans provided by euro area residents mostly accounted for the net inflows of direct investment. By contrast, equity direct investment recorded net outflows of EUR 3.8 billion. The net outflows in portfolio investment consisted of almost equal net outflows in equity portfolio investment, in bonds and notes, and in money market instruments. In 2002, other investment recorded net outflows of EUR 184.4 billion, after a small net inflow of EUR 8.8 billion in 2001. This mainly reflected a sizeable increase in the net external short-term assets of the resident Monetary Financial Institutions. The ECB compiles balance of payments statistics for the euro area on the basis of the data on transactions with residents of countries outside the euro area, as reported by euro area Member States. The methodology used was developed in close co-operation with the European Commission (Eurostat), which publishes the balance of payments for the European Union (   ).

ECB Monthly Bulletin

Annexes

. A detailed methodological note is available on the ECB's website.

Table 1 Table 2

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: Monthly balance of payments of the euro area. : Euro area current account - seasonally adjusted data (Euro 12). Reproduction is permitted provided that the source is acknowledged