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Balance of payments: August 2020

10/21/2020 | 04:35am
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Balance of payments: August 2020 21/10/2020 - Press Releases

Current account

In August 2020, the current account showed a small surplus of €80 million, against a surplus of €1.8 billion in August 2019, due to a significant deterioration in the services balance, which was only partly offset by improvements in the balance of goods and the primary and secondary income accounts.

A €468 million year-on-year decrease in the deficit of the balance of goods is mostly attributable to a decline in the deficit of the oil balance, which is associated with lower international oil prices. The non-oil balance of goods also improved slightly. It should be noted that total exports of goods increased marginally at constant prices, while the corresponding imports fell by 11.5%.

A decrease in the services surplus is mainly accounted for by lower net travel receipts, as non-residents' arrivals and the corresponding receipts fell by 73.3% and 66.5%, respectively, year-on-year. Moreover, the transport balance also worsened, as a result of lower net sea and air transport receipts.

The deficit of the primary income account declined, as all sub-components improved. The secondary income account turned from deficit to surplus, mainly owing to net general government receipts.

In the January-August 2020 period, the current account showed a deficit of €7.9 billion, up by €6.9 billion year-on-year. This development is exclusively due to a decline in the services surplus, which was partly offset by a €3.1 billion drop in the balance of goods deficit as well as the improvement in the primary and secondary income accounts.

The 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 2.3% at constant prices. Total imports of goods decreased by 16% at current prices (-6.2% at constant prices). It should be noted that the drop in exports and imports at current prices is largely due to a decline in oil exports and imports, respectively, as a result of lower international oil prices.

The 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 79.7% and non-residents' arrivals by 78.0% year-on-year, while transport receipts decreased by 14.5%.

Capital account

In August 2020, the capital account surplus registered a strong increase year-on-year, owing to a rise of €790 million in EU capital transfers to the general government. In the January‑August 2020 period, the capital account surplus rose by €1.2 billion year-on-year.

Combined current and capital account

In August 2020, the combined current and capital account (corresponding to the economy's external financing requirements) showed a surplus of €930 million, down by €874 million year‑on‑year. In the January-August 2020 period, the combined current and capital account recorded a deficit of €6.4 billion, against a deficit of €743 million year-on-year.

Financial account

In August 2020, no remarkable transactions were recorded under direct investment.

Under portfolio investment, an increase in residents' external assets is mainly due to a rise of €2.1 billion in residents' holdings of foreign bonds and Treasury bills. A decline in residents' external liabilities is mostly due to a decrease of €100% million in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a drop in residents' external assets mainly reflects a decline of €589 million in residents' deposit and repo holdings abroad. An increase in residents' external liabilities mostly reflects a rise of €1.4 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included).

In the January-August 2020 period, under direct investment, residents' external assets rose by €441 million and residents' external liabilities, which represent non-residents' direct investment in Greece, increased by €2.2 billion.

Under portfolio investment, a net rise in residents' external assets is due to an increase of €29.9 billion in residents' holdings of foreign bonds and Treasury bills. A net decline in residents' external liabilities is mainly due to a decrease of €9.5 billion in non-residents' holdings of Greek government bonds and Treasury bills.[1]

Under other investment, a net rise in residents' external assets reflects mainly an increase (by €2.1 billion) in the statistical adjustment associated with the issuance of banknotes. A net rise in residents' liabilities reflects chiefly an increase of €38.1 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included), as well as a €6.4 billion rise in the outstanding debt to non-residents.

At end-August 2020, Greece's reserve assets stood at €9.6 billion, compared with €7.5 billion at end-August 2019, mainly on account of valuation changes.

Note: Balance of payments data for September 2020 will be released on 20 November 2020.

[1] It is pointed out that in the January-August 2020 period, developments under portfolio and other investment were largely driven by loan securitisations carried out by systemic credit institutions.

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Bank of Greece published this content on 21 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 October 2020 08:34:01 UTC

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