Euro area balance of payments (September 2008)

In September 2008 the working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 10.6 billion. In the financial account, combined direct and portfolio investment showed net inflows of EUR 39 billion.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 10.6 billion in September 2008 (corresponding to a deficit of EUR 6.0 billion in non-adjusted terms). This reflected deficits in current transfers (EUR 6.6 billion) and goods (EUR 5.6 billion), which were only partly offset by a surplus in services (EUR 2.1 billion); the income account was close to balance.

Preliminary results for the third quarter of 2008 show a deficit of EUR 18.9 billion in the current account (corresponding to a deficit of EUR 10.8 billion in non-adjusted terms).

The 12-month cumulated, working day-adjusted current account up to September 2008 recorded a deficit of EUR 35.8 billion (about 0.4% of euro area GDP), compared with a surplus of EUR 48.7 billion a year earlier. This shift was due to a decrease in the surplus in goods (from EUR 64.7 billion to EUR 7.9 billion), an increase in the deficit in current transfers (from EUR 81.6 billion to EUR 90.1 billion) and a shift from surplus (EUR 15.5 billion) to deficit (EUR 7.8 billion) in the income account. Conversely, the services surplus increased from EUR 50.1 billion to EUR 54.2 billion.

In the financial account, combined direct and portfolio investment showed net inflows of EUR 39 billion in September 2008, reflecting the fact that net inflows in portfolio investment (EUR 57 billion) exceeded net outflows in direct investment (EUR 19 billion).

The net outflows in direct investment resulted from net outflows in both equity capital and reinvested earnings (EUR 12 billion) and other capital (mostly inter-company loans) (EUR 6 billion).

Portfolio investment recorded net inflows in debt instruments (EUR 117 billion), which were partly counterbalanced by net outflows in equity (EUR 60 billion). The developments in debt instruments were characterised by net sales of foreign instruments by euro area residents and net purchases of euro area instruments by non-resident investors. The net outflows in equity were largely related to net sales of euro area equity by non-residents.

Financial derivatives recorded net inflows of EUR 5 billion.

Other investment showed net outflows of EUR 35 billion, mainly as a result of net outflows in MFIs (excluding the Eurosystem) (EUR 120 billion) and other sectors (EUR 21 billion) that were only to a certain extent counterbalanced by net inflows in the Eurosystem (EUR 106 billion).

Reserve assets decreased by EUR 1 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 371 billion at the end of September 2008.

In the 12-month period to September 2008 combined direct and portfolio investment showed cumulated net outflows of EUR 107 billion, compared with net inflows of EUR 166 billion a year earlier. This shift largely resulted from a decline in net inflows in portfolio investment (from EUR 342 billion to EUR 65 billion), which in turn mainly reflected a reduction in net purchases of euro area securities by non-resident investors (from EUR 829 billion to EUR 321 billion).

In addition to the balance of payments for September 2008, this press release incorporates revisions for August 2008. In non-adjusted terms, those revisions have resulted in a lower current account deficit (a reduction from EUR 7.9 billion to EUR 6.0 billion) and in an increase in net outflows in portfolio investment (from EUR 14 billion to EUR 18 billion).

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”. These data, as well as the historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW). Data up to September 2008 will also be published in the December 2008 issues of the ECB’s Monthly Bulletin and 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 23 December 2008.

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.