Euro area balance of payments (geographical breakdown for the second quarter of 2007) and international investment position (at the end of the second quarter of 2007)

The current account of the euro area balance of payments (b.o.p.) recorded a deficit of EUR 1.4 billion in the second quarter of 2007. Deficits were recorded for the group of “other countries” (i.e. non G-10 countries outside the European Union), Japan, the EU institutions and Switzerland. By contrast, the main surpluses were with the United Kingdom and the countries that joined the European Union in 2004 and 2007, while the current account balance with the United States was close to zero. In the financial account, net outflows were recorded in direct investment, amounting to EUR 69 billion. These were mainly directed towards the group of “other countries” and the United Kingdom. Portfolio investment recorded net inflows of EUR 70 billion. Purchases by euro area residents predominantly concerned debt instruments issued in the United States, the group of “other countries” and the United Kingdom.

At the end of the second quarter of 2007, the international investment position (i.i.p.) of the euro area showed net liabilities of EUR 1,174 billion vis-à-vis the rest of the world (around 13% of euro area GDP). This represented an increase of about EUR 140 billion in comparison with the revised data for the end of the first quarter of 2007, mainly as a result of exchange rate and price changes of stocks of foreign assets and liabilities.

At the end of the second quarter of 2007, the i.i.p. of the euro area recorded net liabilities of EUR 1,174 billion vis-à-vis the rest of the world (representing around 13% of euro area GDP). This amounted to an increase of EUR 140 billion in comparison with the revised data for the end of the first quarter of 2007 (see Table 2). This increase was mainly related to “other changes” (primarily revaluations, due to exchange rate and asset price changes). Foreign assets are mainly denominated in foreign currencies and foreign liabilities mainly in euro.

The change in the net i.i.p. largely resulted from increases in the net liability positions in portfolio investment (from EUR 1,566 billion to EUR 1,702 billion) and in other investment (from EUR 183 billion to EUR 272 billion), which were only partly offset by an increase in the net asset position in direct investment (from EUR 408 billion to EUR 495 billion).

This press release incorporates revisions of the b.o.p. (with a geographical breakdown) and the i.i.p. for the first quarter of 2007. The revisions in the b.o.p. primarily affected direct and portfolio investment, as well as services. The revisions in the i.i.p. mostly affected the net asset position in direct investment (revised from EUR 369 billion to EUR 408 billion) and the net liability position in portfolio investment (revised from EUR 1,594 billion to EUR 1,566 billion).

Geographical details for the quarterly b.o.p. of the euro area are not available for the items portfolio investment liabilities, financial derivatives or reserve assets. Geographical details of the i.i.p. are only available at an annual frequency.

The ECB and the Statistical Office of the European Communities (Eurostat) each issue a press release on the quarterly b.o.p. for the euro area and the European Union (see Eurostat’s Euro-Indicators news releases). In line with the agreed allocation of responsibilities, the ECB compiles and disseminates monthly and quarterly b.o.p. statistics for the euro area, whereas Eurostat 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 Member States’ transactions and positions with residents of countries outside the euro area and outside the European Union respectively.

A complete set of updated euro area b.o.p. and i.i.p. 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”. These data, as well as the historical euro area b.o.p. and i.i.p. time series, can be downloaded using the ECB’s Statistical Data Warehouse (SDW). The results will be published in the November 2007 issues of the ECB’s Monthly Bulletin and the Statistics Pocket Book. A detailed methodological note is available on the ECB’s website. The next quarterly press release on the euro area b.o.p. (including geographical details) and i.i.p. will be published on 18 January 2008. In addition, a separate press release on the geographical breakdown of the i.i.p. as at the end of 2006, including annual revisions on the euro area b.o.p. and i.i.p., will be published on 14 November 2007.

Table 1a: Quarterly balance of payments of the euro area with a geographical breakdown (Q2 2007)

Table 1b: Quarterly balance of payments of the euro area with a geographical breakdown (four-quarter cumulated transactions ending in Q2 2006 and in Q2 2007)

Table 2: Quarterly balance of payments and international investment position of the euro area