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PRESS RELEASE

Euro area balance of payments in August 2011 
and international investment position 
at the end of the second quarter of 2011

19 October 2011

In August 2011 the seasonally adjusted current account of the euro area recorded a deficit of €5.0 billion. In the financial account, combined direct and portfolio investment recorded net inflows of €36 billion (non-seasonally adjusted).

At the end of the second quarter of 2011 the international investment position of the euro area recorded net liabilities of €1.4 trillion vis-à-vis the rest of the world (approximately 14.5% of euro area GDP). This represented an increase of €108 billion in comparison with the revised data for the end of the first quarter of 2011.

Balance of payments in August 2011

The seasonally adjusted current account of the euro area recorded a deficit of €5.0 billion in August 2011 (see Table 1). This reflected deficits for current transfers (€7.6 billion) and income (€1.2 billion), which were partially offset by surpluses for services (€3.4 billion) and goods (€0.4 billion).

The 12-month cumulated seasonally adjusted current account recorded a deficit of €54.9 billion in August 2011 (around 0.6% of euro area GDP; see Table 1 and Chart 1), compared with a deficit of €24.2 billion a year earlier. This increase resulted mainly from shifts in the balance for goods (from a €26.7 billion surplus to a €2.2 billion deficit) and in the balance for income (from a €6.9 billion surplus to a €2.2 billion deficit), which were partly offset by an increase in the surplus for services (from €39.5 billion to €49.0 billion).

In the financial account (see Table 2), combined direct and portfolio investment recorded net inflows of €36 billion in August 2011, essentially as a result of net inflows for portfolio investment (€36 billion).

The direct investment account was close to balance, as net outflows for other capital (mostly inter-company loans) (€16 billion) were almost counterbalanced by net inflows for equity capital and reinvested earnings (€15 billion).

The net inflows for portfolio investment were accounted for by net inflows for equity (€24 billion) and for debt instruments (€12 billion). These net inflows resulted mainly from net sales of equity and debt securities issued outside the euro area by euro area residents (€67 billion), which were only partly offset by net purchases of euro area equity and debt securities by euro area residents (€31 billion).

The financial derivatives account recorded net outflows of €1 billion.

Other investment recorded net outflows of €28 billion, reflecting net outflows for MFIs excluding the Eurosystem (€51 billion), which were partially offset by net inflows for other sectors (€15 billion), the Eurosystem (€7 billion) and for general government (€1 billion).

The Eurosystem’s stock of reserve assets increased by €34 billion in August 2011 (from €622 billion to €656 billion), mainly owing to an increase in the market price of gold that was partly offset by transactions (excluding valuation effects) amounting to (€3 billion).

In the 12-month period to August 2011 combined direct and portfolio investment recorded cumulated net inflows of €358 billion, compared with net inflows of €50 billion in the preceding 12-month period. This increase was the result of higher net inflows for portfolio investment (from €180 billion to €340 billion) and a switch in the balance for direct investment from net outflows (€130 billion) to net inflows (€18 billion).

International investment position at the end of the second quarter of 2011

At the end of the second quarter of 2011 the international investment position of the euro area recorded net liabilities of €1.4 trillion vis-à-vis the rest of the world (approximately 14.5% of euro area GDP; see Chart 2). This represented an increase of €108 billion in comparison with the revised data for the end of the first quarter of 2011 (see Table 3).

The change in the net international investment position was mainly a result of a higher net liability position for portfolio investment (up from €2,658 billion to €2,913 billion), which was partly offset by a decrease in the net liability position for other investment (down from €191 billion to €64 billion) and a higher net asset position for direct investment (up from €1,063 billion to €1,096 billion). These changes were mainly driven by net transactions and, in the case of portfolio investment, also by “other changes” (predominantly revaluations on account of exchange rate and asset price changes).

At the end of the second quarter of 2011 the gross external debt of the euro area amounted to €11.1 trillion (approximately 119% of euro area GDP), which represented an increase of €271 billion in relation to the revised data for the end of the previous quarter.

Data revisions

This press release incorporates revisions to the monthly balance of payments for the period from January 2011 to July 2011, and to the quarterly international investment position for the end of the first quarter of 2011.

The revisions to the balance of payments in July 2011 did not significantly change the previously published data. The current account deficit in the second quarter of 2011 was revised downwards (from €28.3 billion to €20.8 billion), mainly owing to revisions in services and income. In the second quarter of 2011 the revisions to the financial account were mainly recorded for portfolio investment and other investment. The revisions to the international investment position for the end of the first quarter of 2011 did not significantly change the previously published net liability position.

Additional information on the euro area balance of payments and international investment position

In this press release, the seasonally adjusted current account refers to working day and seasonally adjusted data. Data for the financial account are not working day or seasonally adjusted.

In line with the agreed allocation of responsibilities, the European Central Bank compiles and disseminates monthly and quarterly balance of payments statistics for the euro area, whereas the European Commission (Eurostat; see news releases for “Euro-indicators”) focuses on quarterly and annual aggregates for the European Union. These data comply with international standards, particularly those set out in the IMF’s Balance of Payments Manual (fifth edition). The aggregates for the euro area and the European Union are compiled consistently on the basis of transactions and positions vis-à-vis residents of countries outside the euro area and the European Union respectively.

A complete set of updated euro area balance of payments statistics (including a quarterly geographical breakdown for the main counterparts) and international investment position statistics is available in the “Statistics” section of the ECB’s website under the headings “Data services”/“Latest monetary, financial markets and balance of payments statistics”. These data, as well as historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW). Data up to August  2011 will also be published in the November 2011 issues of the ECB’s Monthly Bulletin and Statistics Pocket Book. Detailed methodological notes are available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 21 November 2011 The next press release including the quarterly international investment position will be published on 19 January 2012.

Annexes

Table 1: Current account of the euro area

Table 2: Monthly balance of payments of the euro area

Table 3: Quarterly international investment position of the euro area

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