Euro area quarterly balance of payments and international investment position: second quarter of 2019

• Euro area current account surplus at €311 billion (2.7% of euro area GDP) in the four quarters to the second quarter of 2019, down from €410 billion (3.6% of GDP) a year earlier.
• Geographic counterparts: largest bilateral surpluses vis-à-vis the United Kingdom (€155 billion, down from €164 billion a year earlier) and the United States (€137 billion, up from €117 billion), and largest deficit vis-à-vis China (€64 billion, down from €70 billion).
• The international investment position showed net liabilities of €245 billion (around 2% of euro area GDP) at the end of the second quarter of 2019, compared with net liabilities of €254 billion in the previous quarter.

Current account

The current account of the euro area recorded a surplus of €311 billion (2.7% of euro area GDP) in the four quarters to the second quarter of 2019, compared with a surplus of €410 billion (3.6% of euro area GDP) a year earlier (see Table 1). The decline in the current account surplus reflected lower surpluses for goods (down from €338 billion to €302 billion) and services (down from €119 billion to €82 billion) and a higher deficit for secondary income (up from €134 billion to €160 billion). The surplus in primary income remained relatively stable at €86 billion (slightly down from €88 billion).

The decline in the surplus for services was mainly due to a larger deficit in other business services (up from €4 billion to €48 billion). In addition, lower surpluses were recorded for travel services (down from €45 billion to €40 billion) and for insurance, pension and financial services (down from €16 billion to €13 billion). These developments were partly offset by a larger surplus for telecommunication, computer and information services (up from €73 billion to €88 billion).

The overall stability in the primary income surplus masks offsetting developments in its components. The surplus for other primary income declined from €20 billion to €11 billion, while the investment income surplus increased from €52 billion to €59 billion. The latter mainly reflected larger surpluses for portfolio debt income (up from €21 billion to €32 billion) and direct investment income (up from €117 billion to €121 billion), which were partly offset by a larger deficit for portfolio equity income (up from €100 billion to €106 billion).

Data for the current account of the euro area

Data on the geographic counterparts of the euro area current account (see Chart 1) show that in the four quarters to the second quarter of 2019 the euro area recorded its largest bilateral surpluses vis-à-vis the United Kingdom (€155 billion, down from €164 billion a year earlier), the United States (€137 billion, up from €117 billion), a residual group of other countries (€105 billion, down from €145 billion) and Switzerland (€58 billion, up from €45 billion). The largest bilateral deficits in the euro area current account were observed vis-à-vis China (€64 billion, down from €70 billion) and offshore centres (€53 billion, following a surplus of €4 billion a year earlier).

The most significant geographic changes in the goods balance in the four quarters to the second quarter of 2019 relative to the previous year were a shift vis-à-vis the residual group of other countries from a surplus of €27 billion to a deficit of €20 billion and an increase in the surplus vis-à-vis the United States from €147 billion to €161 billion. In services, the deficit vis-à-vis offshore centres increased from €48 billion to €89 billion. Meanwhile, the primary income balance vis-à-vis Switzerland moved from a deficit of €13 billion to a surplus of €2 billion, while the deficit vis-à-vis offshore centres increased from €8 billion to €20 billion. The secondary income deficit vis-à-vis other EU increased from €74 billion to €98 billion.

Data for the geographical breakdown of the euro area current account

International investment position

At the end of the second quarter of 2019 the international investment position of the euro area recorded net liabilities of €245 billion vis-à-vis the rest of the world (around 2% of euro area GDP), compared with net liabilities of €254 billion in the previous quarter (see Chart 2 and Table 2).

Data for the net international investment position of the euro area

This small improvement of €9 billion mainly reflected lower net liabilities for other investment (€701 billion, down from €809 billion) and larger reserve assets (€771 billion, up from €741 billion). Conversely, net assets for direct investment declined from €2,055 billion to €1,968 billion and net liabilities in portfolio equity increased from €2,584 billion to €2,643 billion.

Data for the international investment position of the euro area

The small improvement in the euro area’s net international investment position in the second quarter of 2019 compared to the previous quarter was due to positive transactions and net price changes, which were partly offset by negative net exchange rate changes (see Chart 3).

Net liabilities for other investment declined mainly due to positive transactions, while the increase in reserve assets resulted largely from positive net price changes (see Table 2). The decline in net assets for direct investment and the increase in net liabilities for portfolio equity were both driven by negative transactions and negative net exchange rate changes.

At the end of the second quarter of 2019 gross external debt of the euro area totalled €14.7 trillion (around 126% of euro area GDP), which represents an increase of €66 billion compared with the previous quarter.

Data for changes in the net international investment position of the euro area

Data revisions

This press release incorporates sizable data revisions for all quarters between the first quarter of 2008 and the first quarter of 2019. The revisions to direct investment and portfolio investment were particularly sizeable and reflect revised national contributions to euro area aggregates as a result of the incorporation of newly available information, partly in the context of benchmark revisions.

Next press releases

• Monthly balance of payments: 18 October 2019 (reference data up to August 2019)
• Quarterly balance of payments and international investment position: 10 January 2020 (reference data up to the third quarter of 2019)

For media queries, please contact Philippe Rispal, tel.: +49 69 1344 5482.

Notes

• All data are neither seasonally nor working day-adjusted. Ratios to GDP (including in the charts) refer to four-quarter sums of non-seasonally and non-working day-adjusted GDP figures.
• Hyperlinks in the press release refer to data that may change with subsequent releases as a result of revisions.