Euro area balance of payments (January 2007)

In January 2007 the seasonally adjusted current account of the euro area showed a surplus of EUR 2.7 billion, as surpluses in goods and services exceeded deficits in current transfers and income. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 34 billion, mainly reflecting net purchases of euro area equity securities by non-residents.

Since Slovenia adopted the euro on 1 January 2007, Slovenian economic agents are now euro area residents. Thus, for the first time, this press release shows consistent time series of the balance of payments for the enlarged euro area, also including the period before 2007. For the earlier data, the changes to the euro area balance of payments involve: (i) the inclusion of transactions between Slovenian residents and non-euro area residents, and (ii) the exclusion of transactions between euro area residents and Slovenian residents. In general, Slovenia’s accession has had a minor impact on the overall euro area results: for example, the working day-adjusted current account deficit in 2006 has increased by EUR 1 billion.

In January 2007, the working day and seasonally adjusted current account of the euro area recorded a surplus of EUR 2.7 billion (corresponding to a deficit of EUR 6.0 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 4.2 billion) and services (EUR 2.0 billion) that were partly offset by deficits in current transfers (EUR 2.9 billion) and income (EUR 0.6 billion).

The 12-month cumulated, working day-adjusted current account up to January 2007 recorded a deficit of EUR 12.8 billion, i.e. around 0.2% of GDP, compared with a deficit of EUR 7.8 billion a year earlier. This increase resulted from a decrease in the goods surplus (by EUR 10.4 billion) and an increase in the current transfers deficit (by EUR 4.3 billion), which were partially compensated by a decrease in the income deficit (by EUR 9.9 billion). The services surplus remained broadly unchanged.

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 34 billion in January 2007, reflecting net inflows in portfolio investment (EUR 39 billion) and net outflows in direct investment (EUR 5 billion).

Within direct investment, the net outflows resulted from net outflows in equity capital and reinvested earnings (EUR 17 billion) that were partly offset by net inflows in other capital (EUR 12 billion) , which mostly consists of inter-company loans.

The portfolio investment account recorded net inflows in both equity (EUR 34 billion) and debt instruments (EUR 5 billion). The net inflows in equity were mainly due to the fact that net purchases of euro area equity by non-residents (EUR 44 billion) largely surpassed net purchases of non-euro area equity by residents (EUR 10 billion).

Other investment recorded net inflows of EUR 27 billion, mainly as a result of net inflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 53 billion), which were partially offset by net outflows in other sectors (EUR 26 billion).

Reserve assets increased by EUR 3 billion (excluding valuation effects). At the end of January 2007 the stock of the Eurosystem’s reserve assets stood at EUR 338 billion.

In the 12-month period to January 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 179 billion, compared with net outflows of EUR 57 billion a year earlier. This shift resulted from both higher net inflows in portfolio investment (from EUR 133 billion to EUR 327 billion) and lower net outflows in direct investment (from EUR 190 billion to EUR 148 billion). The developments in portfolio investment largely reflected a shift in bonds and notes from net outflows (EUR 29 billion) to net inflows (EUR 167 billion). The decrease in net outflows in direct investment was mainly due to other capital (mostly intercompany loans), which likewise turned from net outflows (EUR 33.2 billion) to net inflows (EUR 3.3 billion).

In addition to the balance of payments for January 2007, this press release incorporates revisions for December 2006. It should be noted, however, that these revisions have not significantly altered the previously published statistics.

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 headings “Data services”/“Latest monetary, financial markets and balance of payments statistics”.

The data can also be downloaded using the ECB’s Statistical Data Warehouse (SDW) at http://sdw.ecb.int.

Results up to January 2007 will also be published in the April  2007 issue of the ECB’s Monthly Bulletin and the Statistics Pocket Book.

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

The next press release on the euro area monthly balance of payments will be published on 27 April 2007.

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

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