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Balance of Payments: July 2020

09/21/2020 | 04:30am
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Balance of Payments: July 2020 21/09/2020 - Press Releases Current account

In July 2020, the current account showed a deficit of €875 million, against a surplus of €1.3 billion in July 2019, due to a significant deterioration in the services balance, which was only partly offset by the improved balance of goods and primary and secondary income accounts.

A year-on-year decrease in the deficit of the balance of goods by €414 million is attributable to the fact that the drop in imports (by 15.8% at current and by 5.2% at constant prices) exceeded the decline in exports (by 12.6% at current prices), which, however, grew by 4% at constant prices.

A €3.2 billion decrease in the services surplus is mainly accounted for by lower net travel receipts. Moreover, net transport receipts also declined, while the other services deficit increased. It should be noted that travel receipts dropped by 84.4% and non-residents' arrivals fell by 85.4% year-on-year. Transport (mainly sea transport) receipts decreased by 26.2%.

The deficit of the primary income account fell mainly on account of lower net interest, dividend and profit payments. Τhe secondary income account turned from deficit to surplus, mainly as a result of the transfer to the Greek State of income earned on ANFA/SMP holdings.

In the January-July 2020 period, the current account showed a deficit of €7.9 billion, up by €5.2 billion year-on-year. This development is almost exclusively due to a decline in the services surplus, as well as the surplus of the secondary income account, which was partly offset by a significant drop in the balance of goods deficit as well as the drop in the deficit of the primary income account.

A decrease in the deficit of the balance of goods is accounted for by a larger decline in imports, in absolute terms, than in exports. Specifically, total exports of goods fell by 13.3% at current prices, but grew by 2.4% at constant prices. Total imports of goods decreased by 15.7% at current prices (-5.3% at constant prices). It should be noted that the drop in exports and imports is largely due to a decline in oil exports and imports respectively, as a result of lower international oil prices.

A significant decrease in the services surplus is chiefly attributable to a deterioration in the travel services balance, as well as the other individual components. Travel receipts dropped by 86.2% and non-residents' arrivals by 80.1% year-on-year, while transport receipts decreased by 12.2%.

Capital account

In July 2020, the capital account deficit registered a small increase year-on-year, while in the January-July 2020 period the capital account surplus increased.

Combined current and capital account

In July 2020, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €898 million, against a surplus of €1.3 billion year-on-year. In the January-July 2020 period, the combined current and capital account recorded a deficit of €7.3 billion, against a deficit of €2.5 billion year-on-year.

Financial account

In July 2020, under direct investment, residents' external liabilities (non-residents' direct investment in Greece) rose by €365 million and their external assets by €42 million, with no remarkable transactions.

Under portfolio investment, an increase in residents' external assets is almost entirely attributable to a rise of €8.2 billion in their holdings of foreign bonds and Treasury bills, which is mostly associated with a loan securitisation by a systemic credit institution. A decline in residents' external liabilities is mostly due to a decrease of €738 million in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a decrease in residents' external assets mainly reflects a decline of €943 million in residents' deposit and repo holdings abroad. An increase in residents' external liabilities is largely attributable to a rise of €8.8 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included), also including the transaction related to the above-mentioned loan securitisation.

In the January-July 2020 period, under direct investment, residents' external assets rose by €325 million and residents' external liabilities, which represent non-residents' direct investment in Greece, increased by €1.9 billion.

Under portfolio investment, a net increase in residents' external assets is due to a rise of €27.8 billion in residents' holdings of foreign bonds and Treasury bills. A net decline in residents' external liabilities is mainly due to a decrease of €8.7 billion in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a net rise in residents' external assets reflects mainly an increase (by €1.9 billion) in the statistical adjustment associated with the issuance of banknotes. A net rise in their liabilities reflects chiefly an increase of €36.7 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included), as well as a €6.3 billion rise in the outstanding debt to non-residents.[1]

At end-July 2020, Greece's reserve assets stood at €9.4 billion, compared with €7.0 billion at end-July 2019, mainly on account of valuation changes.

Note: Balance of payments data for August 2020 will be released on 21 October 2020.

[1] It is pointed out that in the January-July 2020 period, developments under portfolio and other investment were largely driven by loan securitisations carried out by systemic credit institutions also in previous months (see Bank of Greece, Press Releases: Balance of Payments, March 2020 and April 2020).

Disclaimer

Bank of Greece published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 08:29:00 UTC

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