Euro area balance of payments (February 2007)

In February 2007 the seasonally adjusted current account of the euro area showed a deficit of EUR 5.3 billion, as deficits in current transfers and income exceeded surpluses in goods and services. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 16 billion, mainly reflecting net purchases of euro area securities by non-residents.

The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 5.3 billion in February 2007 (corresponding to a deficit of EUR 7.2 billion in non-seasonally adjusted terms). This reflected deficits in current transfers (EUR 6.6 billion) and income (EUR 5.1 billion) that were only partly offset by surpluses in services (EUR 3.8 billion) and goods (EUR 2.6 billion).

The 12-month cumulated, working day-adjusted current account up to February 2007 recorded a deficit of EUR 3.3 billion, i.e. about 0.1% of GDP, compared with a deficit of EUR 13.2 billion a year earlier. This decrease resulted from a reduction in the income deficit (by EUR 13.0 billion) and, to a lesser extent, from an increase in the surpluses in goods (by EUR 1.7 billion) and services (by EUR 0.7 billion), which were partly offset by an increase in the deficit in current transfers (by EUR 5.5 billion).

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 16 billion in February 2007, reflecting net inflows in portfolio investment (EUR 29 billion) and net outflows in direct investment (EUR 13 billion).

Within direct investment, the net outflows resulted mainly from net outflows in other capital, mostly inter-company loans (EUR 10 billion)

The portfolio investment account recorded net inflows in both equity (EUR 17 billion) and debt instruments (EUR 11 billion). Net purchases of euro area equity and bonds and notes by non-residents (equalling EUR 40 billion and EUR 39 billion respectively) accounted predominantly for the net inflows in portfolio investment.

Other investment recorded net outflows of EUR 15 billion, mainly as a result of net outflows by monetary financial institutions ( MFIs) excluding the Eurosystem (EUR 12 billion) and by other sectors (EUR 5 billion).

Reserve assets increased by EUR 1 billion (excluding valuation effects). At the end of February 2007 the stock of the Eurosystem’s reserve assets stood at EUR 337 billion.

In the 12-month period to February 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 203 billion, compared with net outflows of EUR 98 billion a year earlier. This shift resulted from both higher net inflows in portfolio investment (from EUR 123 billion to EUR 350 billion) and lower net outflows in direct investment (from EUR 220 billion to EUR 148 billion). The developments in portfolio investment largely reflected a shift in bonds and notes from net outflows (EUR 42 billion) to net inflows (EUR 207 billion). The decrease in net outflows in direct investment was due to lower net outflows in both equity capital and reinvested earnings (from EUR 180 billion to EUR 147 billion) and other capital, mostly inter-company loans (from EUR 41 billion to EUR 1 billion).

In addition to the balance of payments for February 2007, this press release incorporates revisions for January 2007.

The main changes consisted of lower net combined direct and portfolio investment inflows, which were revised downwards from EUR 34 billion to EUR 23 billion in January 2007. This predominantly resulted from higher net direct investment outflows, which were revised upwards from EUR 5 billion to EUR 12 billion due to a revision in equity capital and reinvested earnings.

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 (as well as the euro area data according to the composition of the euro area during the reference period).

Results up to February 2007 will also be published in the May 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 29 May 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.