Euro area balance of payments (monthly developments in march 2004 and revised data for february 2004)

Seasonally adjusted current account surplus stable in March

The seasonally adjusted current account of the euro area showed a surplus of EUR 5.1 billion in March 2004 (EUR 12.4 billion in non-seasonally adjusted terms). This reflected surpluses in both goods (EUR 12.8 billion) and services (EUR 0.1 billion), which were partly offset by deficits in income (EUR 3.6 billion) and current transfers (EUR 4.2 billion).

Compared with the revised data for February 2004, the seasonally adjusted current account surplus remained virtually unchanged in March. This was the result of an increase in the goods surplus (by EUR 2.0 billion) and a decrease in the deficit on current transfers (by EUR 1.3 billion) being counterbalanced by a higher income deficit (by EUR 2.4 billion) and a lower services surplus (by EUR 1.1 billion).

The 12-month cumulated current account surplus of the euro area up to March 2004 amounted to EUR 36.0 billion, i.e. about 0.5% of GDP, compared with EUR 45.6 billion a year earlier. This mainly resulted from a decline in the surpluses for goods (reflecting lower exports) and for services. The rise in the deficit on current transfers was almost offset by the contraction in the income deficit. More recently, the 12-month cumulated current account surplus showed a tendency to increase, primarily due to an increase in the goods surplus.

 Euro area balance of payments: 12-month cumulated flows (EUR billions) —— current account balance ------ net direct investment —— net portfolio investment

Net outflows in the financial account

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 23.9 billion in March 2004, reflecting net outflows in direct investment (EUR 22.6 billion) and, to a lesser extent, in portfolio investment (EUR 1.3 billion).

The developments in direct investment were accounted for by net outflows both in equity capital and reinvested earnings (EUR 12.0 billion) and in other capital – mostly inter-company loans (EUR 10.6 billion). In more detail, non-resident companies reduced their loans to affiliates in the euro area by EUR 12.7 billion, while resident investors increased their investment abroad, in the form of equity capital and reinvested earnings, by a total of EUR 9.4 billion.

In portfolio investment, net outflows of EUR 1.3 billion resulted from net outflows both in equity securities (EUR 6.1 billion) and in bonds and notes (EUR 15.5 billion), which more than offset net inflows in money market instruments (EUR 20.3 billion). Developments in money market instruments were characterised by net purchases of euro area securities by non-residents (EUR 13.0 billion) and net sales of foreign securities by residents (EUR 7.3 billion).

Net flows in other investment remained virtually balanced as the net outflows recorded by the euro area monetary financial institutions excluding the Eurosystem were offset by the net inflows observed in other sectors.

Reserve assets decreased by EUR 3.9 billion in March 2004 (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 308.4 billion at the end of March 2004 (http://www.ecb.europa.eu/stats/reserves/04/0403eur.htm).

In the 12-month period up to March 2004, combined direct and portfolio investment recorded cumulated net outflows of EUR 24.7 billion, compared with net inflows of EUR 173.5 billion a year earlier. This mainly resulted from lower net inflows in portfolio investment due, in particular, to an increase in investment by euro area residents in foreign equity securities and bonds and notes. Over the same period, direct investment recorded a shift from net inflows (of EUR 18.9 billion) to net outflows (of EUR 50.0 billion), mainly due to the net redemption of inter-company loans by euro area affiliates of foreign companies.

Data revisions

In addition to the monthly data for March 2004, this press release incorporates a revised set of balance of payments statistics for February 2004. The main revision concerns an increase of EUR 16.0 billion in portfolio investment, mainly due to net purchases of euro area equity securities by non-residents.

Additional information on the euro area balance of payments

A complete set of updated euro area balance of payments statistics is available on the ECB’s website in the “Statistics” section under the heading “Latest monetary, financial markets and balance of payments statistics (includes release schedules)”. The results up to March 2004 will also be published in the June 2004 issue of the ECB’s Monthly Bulletin and the Statistics Pocketbook. A detailed methodological note is available on the ECB’s website. The next press release on euro area balance of payments will be published on 25 June 2004.

Annexes

Table 1: Euro area current account – seasonally adjusted data.

Table 2: Monthly balance of payments of the euro area – non-seasonally adjusted data.