Press release

2 October 2018

Euro area quarterly balance of payments and international investment position:
second quarter of 2018

  • The current account of the euro area showed a surplus of €401 billion (3.5% of euro area GDP) in the four quarters to the second quarter of 2018, compared with a surplus of €320 billion (2.9% of euro area GDP) a year earlier.
  • As regards geographic counterparts, in the four quarters to the second quarter of 2018 the euro area current account recorded the largest bilateral surpluses vis-à-vis the United Kingdom (€158 billion, unchanged from the previous four quarters) and the United States (rising from €87 billion to €116 billion), while the largest deficit was registered vis-à-vis China (declining from €78 billion to €67 billion).
  • At the end of the second quarter of 2018 the international investment position of the euro area recorded net liabilities of €536 billion (5% of euro area GDP), compared with net liabilities of €752 billion in the previous quarter.

Current account

The current account of the euro area showed a surplus of €401 billion (3.5% of euro area GDP) in the four quarters to the second quarter of 2018, compared with a surplus of €320 billion (2.9% of euro area GDP) a year earlier (see Table 1). The increase in the current account surplus reflected positive developments in all components, with a larger increase for services (rising from €60 billion to €116 billion) and smaller increases in the surpluses for goods (from €333 billion to €341 billion) and primary income (from €74 billion to €80 billion). The current account surplus was further supported by a decline in the deficit for secondary income (from €147 billion to €136 billion).

The larger surplus in services resulted mainly from increases in the surpluses for telecommunication, computer and information services (from €66 billion to €78 billion) and travel services (from €37 billion to €43 billion) and a smaller deficit for other business services (from €39 billion to €5 billion).

The increase in the primary income surplus was mainly due to larger surpluses for portfolio debt income (from €9 billion to €22 billion) and other primary income (from €13 billion to €18 billion), the latter mostly related to transactions with the EU institutions. These were partly offset by a decrease in the surplus for direct investment income (from €114 billion to €109 billion) and a larger deficit in portfolio equity income (from €88 billion to €94 billion).

Table 1

Current account of the euro area

(EUR billions, unless otherwise indicated; transactions during the period; non-working day and non-seasonally adjusted)

J:\Desktop3\2018Q2 production\Charts\Table1.png

Source: ECB
Note: “Equity” comprises equity and investment fund shares. Discrepancies between totals and their components may arise from rounding.

Data for the current account of the euro area

Newly available 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 2018 the euro area recorded the largest surpluses vis-à-vis the United Kingdom (€158 billion, unchanged from the previous four quarters), a residual group of other countries (declining from €145 billion to €132 billion), the United States (rising from €86 billion to €116 billion) and Switzerland (increasing from €33 billion to €48 billion). The largest bilateral deficit in the euro area current account was recorded vis-à-vis China (declining from €78 billion to €67 billion). The current account balance vis-à-vis offshore centres moved from a deficit of €21 billion to a surplus of €9 billion.

The most significant geographic changes in the components of the euro area current account balance in the four quarters to the second quarter of 2018 compared to the previous year were a decline in the goods surplus vis-à-vis other countries (from €56 billion to €28 billion) and an increase in the services surplus vis-à-vis Switzerland (from €11 billion to €35 billion). Moreover, the euro area current account registered an increase in the goods surplus vis-à-vis the United States (from €124 billion to €146 billion), while the primary income balance vis-à-vis Switzerland moved from a surplus of €10 billion to a deficit of €10 billion.

Chart 1

Geographical breakdown of the euro area current account balance

(Four-quarter moving sums in EUR billions; non-seasonally adjusted)

J:\Desktop3\2018Q2 production\Charts\Chart1.png

Source: ECB.
Notes: “Other EU” comprises EU Member States and EU institutions outside the euro area excluding the United Kingdom.

Data for the geographical breakdown of the euro area current account

International investment position

At the end of the second quarter of 2018 the international investment position of the euro area recorded net liabilities of €536 billion vis-à-vis the rest of the world (5% of euro area GDP), compared with net liabilities of €752 in the previous quarter (see Chart 2 and Table 2).

Chart 2

Net international investment position of the euro area

(Net outstanding amounts at end of period as a percentage of four-quarter moving sums of GDP)

J:\Desktop3\2018Q2 production\Charts\Chart2.png

Source: ECB.

Data for the net international investment position of the euro area

This improvement of €216 billion mainly reflected higher net assets for direct investment (€2,045 billion, up from €1,911 billion) and portfolio debt (€185 billion, up from €51 billion). These developments were partly offset by higher net liabilities for other investment (€933 billion, up from €870 billion).

Table 2

International investment position of the euro area

(EUR billions, unless otherwise indicated; amounts outstanding at the end of the period, flows during the period; non-working day and non-seasonally adjusted)

J:\Desktop3\2018Q2 production\Charts\Table2.png

Source: ECB.
Note: “Equity” comprises equity and investment fund shares. Net financial derivatives are reported under assets. Discrepancies between totals and their components may arise from rounding.

Data for the international investment position of the euro area

The improvement in the euro area’s net international investment position in the second quarter of 2018 was driven by net positive exchange rate changes, transactions and other volume changes, which were only slightly offset by net negative price revaluations (see Chart 3). Net assets in direct investment increased primarily due to positive net transactions and other volume changes (see Table 2), while higher net assets for portfolio debt resulted from positive net developments in all components, but particularly transactions. The increase in net liabilities for other investment was also largely driven by transactions.

At the end of the second quarter of 2018 the gross external debt of the euro area amounted to €14.3 trillion (126% of euro area GDP), which represents an increase of €176 billion compared with the previous quarter.

Chart 3

Changes in the net international investment position of the euro area

(EUR billions; flows during the period)

J:\Desktop3\2018Q2 production\Charts\Chart3.png

Source: ECB.
Notes: Other volume changes mainly reflect reclassifications and data enhancements. 

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

Data revisions

This press release incorporates revisions to the data for all the reference periods between the fourth quarter of 2012 and the first quarter of 2018. The revisions to direct investment, portfolio investment and other investment were particularly sizeable and reflect revised national contributions to the euro area aggregates, in particular for the Netherlands, Luxembourg, Ireland and Germany, mainly in the context of national benchmark revisions and revised compilation methods.

Next press releases

  • Monthly balance of payments: 19 October 2018 (reference data up to August 2018)
  • Quarterly balance of payments and international investment position: 8 January 2019 (reference data up to the third quarter of 2018).

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.
  • The hyperlinks in the main body of the press release are dynamic. The data they lead to may therefore change with subsequent data releases as a result of revisions.

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