Euro area balance of payments (October 2005)

In October 2005 the seasonally adjusted current account of the euro area recorded a deficit of EUR 9.0 billion as the deficits in income and current transfers more than offset the surplus in services. The goods account was close to balance. In the financial account, combined direct and portfolio investment recorded net outflows of EUR 6 billion. This predominantly reflected net sales of euro area portfolio equity by non-residents.

The seasonally adjusted current account of the euro area showed a deficit of EUR 9.0 billion in October 2005 (corresponding to a deficit of EUR 9.2 billion in non-seasonally adjusted terms). This reflected deficits in income (EUR 7.4 billion) and current transfers (EUR 4.4 billion) that were only partly offset by a surplus in services (EUR 2.6 billion). The goods account was close to balance.

The 12-month cumulated current account up to October 2005 recorded a deficit (EUR 8.7 billion, i.e. around 0.1% of GDP), switching from a surplus of EUR 42.6 billion (around 0.5% of GDP) a year earlier. This shift mainly resulted from a decline of EUR 44.7 billion in the goods surplus.

In the financial account, combined direct and portfolio investment recorded net outflows of EUR 6 billion in October 2005, reflecting net outflows in both portfolio investment (EUR 5 billion) and direct investment (EUR 1 billion).

In direct investment, net inflows of EUR 13 billion in equity capital and reinvested earnings almost compensated for net outflows of EUR 14 billion in other capital (mostly inter-company loans).

In portfolio investment, net outflows in equity securities (EUR 13 billion) more than offset net inflows in debt instruments (EUR 7 billion). The net outflows in equity securities were mainly due to net sales of euro area equity securities by non-residents (EUR 10 billion).

Other investment recorded net inflows of EUR 1 billion as a result of net inflows in monetary financial institutions (MFIs) excluding the Eurosystem (EUR 2 billion) and the general government (EUR 2 billion), which were partly offset by outflows in the Eurosystem (EUR 1 billion) and other sectors (EUR 2 billion).

Reserve assets were virtually unchanged (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 311 billion at the end of October 2005.

In the 12-month period up to October 2005, combined direct and portfolio investment recorded cumulated net inflows of EUR 60 billion, as compared with net outflows of EUR 2 billion a year earlier. This mainly resulted from an increase of EUR 159 billion in net inflows in portfolio investment (from EUR 37 billion to EUR 196 billion) that was largely due to increased net purchases of euro area equities by non-residents. Over the same period, net outflows in direct investment increased by EUR 97 billion (from EUR 39 billion to EUR 136 billion), on account of both higher investment abroad by euro area residents and lower investment in euro area equity capital and reinvested earnings by non-residents.

In addition to the monthly balance of payments data for October 2005, this press release incorporates revisions to data for September 2005. These revisions have not significantly altered the previous results.

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 heading “Data services”/“Latest monetary, financial markets and balance of payments statistics”. The results up to October 2005 will also be published in the January 2006 issue of the ECB’s Monthly Bulletin. A detailed methodological note [pdf] is available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 24 January 2006.

Table 1: Current account of the euro area – seasonally adjusted data.

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