Euro area balance of payments (monthly developments in May 2005)

21 July 2005

In May 2005, the seasonally adjusted current account of the euro area was close to balance, reflecting a surplus in goods that was counterbalanced by deficits in income and current transfers. Combined direct and portfolio investment showed net inflows, mainly as a consequence of net purchases of euro area equity securities by non-residents.

Current account

The seasonally adjusted current account of the euro area was close to balance in May 2005 (corresponding to a deficit of EUR 3.9 billion in non-seasonally adjusted terms). This mainly reflected a surplus in goods (EUR 7.2 billion) that was offset by deficits in current transfers (EUR 4.3 billion) and income (EUR 2.5 billion).

Compared with the revised data for April 2005, the seasonally adjusted current account balance was virtually unchanged as a result of an increase in the goods surplus (by EUR 1.3 billion) and a decrease in the income deficit (by EUR 1.4 billion) that were compensated for by a fall in the services surplus (by EUR 1.2 billion) and a rise in the current transfers deficit (by EUR 1.4 billion).


The 12-month cumulated surplus of the euro area current account up to May 2005 amounted to EUR 20.9 billion, i.e. about 0.3 % of GDP, compared with EUR 43.6 billion a year earlier (see chart). This decrease mainly resulted from a fall of the surplus in goods (by EUR 40.8 billion) which was partly compensated for by a lower deficit in income (by EUR 16.1 billion) and, to a lesser extent, by a higher surplus in services.

Financial account

In the financial account, combined direct and portfolio investment recorded net inflows of EUR 27.9 billion in May 2005, reflecting net inflows in both direct investment (EUR 3.8 billion) and portfolio investment (EUR 24.0 billion).

With regard to direct investment, net outflows in equity capital and reinvested earnings in foreign affiliates of EUR 7.4 billion partly offset net inflows in other capital (mostly inter-company loans) of EUR 11.2 billion.

The developments in portfolio investment resulted from net inflows in equity securities (EUR 22.4 billion), which were mostly accounted for by net purchases of euro area equity securities by non-residents (EUR 26.6 billion). Net inflows in debt instruments amounted to EUR 1.6 billion, mainly as a result of net inflows in bonds and notes, and were partially counterbalanced by net outflows in money market instruments.

Other investment recorded net inflows of EUR 10.1 billion, stemming mainly from net inflows of EUR 37.9 billion recorded by monetary financial institutions (MFIs) excluding the Eurosystem. These were partly offset by outflows of EUR 29.8 billion for “other sectors”, i.e. non-MFI corporations and households.

Reserve assets decreased by EUR 2.6 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 291.6 billion at the end of May 2005.

In the 12-month period up to May 2005, combined direct and portfolio investment recorded cumulated net inflows of EUR 3.5 billion, compared with net outflows of EUR 43.9 billion a year earlier. This resulted from a switch in portfolio investment from net outflows (EUR 5.0 billion) to net inflows (EUR 81.8 billion), mainly owing to higher net purchases of euro area securities by non-residents. Over the same period, net outflows in direct investment increased by EUR 39.4 billion, stemming predominantly from an increase in equity investment abroad by euro area companies.

Data revisions

In addition to the monthly balance of payments data for May 2005, this press release incorporates revisions to data from October 2004 to April 2005. While these revisions have not significantly affected the current account balance, in the financial account they resulted in higher outflows in direct investment.

Additional information on the euro area balance of payments

A complete set of updated euro area balance of payments 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 May 2005 will also be published in the August 2005 issue of the ECB’s Monthly Bulletin. 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 22 August 2005. A separate press release on the quarterly euro area balance of payments including data vis-à-vis main counterparts and quarterly international investment position statistics will be issued on 27 July 2005.


Table 1: Euro area current account – seasonally adjusted data.

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

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