Balance of payments: October 2020

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Balance of payments: October 2020 21/12/2020 - Press Releases

Current account

In October 2020, the current account showed a deficit of €767 million, up by €90 million year-on-year, due to a decline in the services surplus. This was partly offset by improvements in the balance of goods and the primary and secondary income accounts.

A €615 million decrease in the deficit of the balance of goods is attributable to the fact that imports declined at a faster pace than exports. Lower exports and imports, at current prices mainly reflect a decrease in international oil prices. Total exports of goods fell by 9.2% at current prices (up by 9.2% at constant prices), while the corresponding imports dropped by 18.0% at current prices (-6.8% at constant prices).

A decrease of €787 million in the services surplus is mainly accounted for by lower net travel receipts, as non-residents' arrivals and the corresponding receipts fell by 65.6% and 64.0%, respectively, year-on-year. The surplus of the transport balance also shrank, as a result of lower net sea and air transport receipts, while the other services balance shifted from deficit to surplus.

In the January-October 2020 period, the current account showed a deficit of €9.4 billion, up by €8.6 billion year-on-year. This development is exclusively due to a decline of €13.6 billion in the services surplus, which was partly offset by a €4.0 billion drop in the balance of goods deficit, as well as an improvement in the primary and secondary income accounts.

The decrease in the deficit of the balance of goods is accounted for by the fact that imports fell at a faster pace than exports. Specifically, total exports of goods fell by 12.7% at current prices, but grew by 3.5% at constant prices. Total imports of goods decreased by 15.9% at current prices (-5.5% at constant prices). It should be noted that the drop in exports and imports at current prices is largely due to a decline in the value of oil exports and imports, respectively, as a result of lower international oil prices.

The decrease in the services surplus is chiefly attributable to a deterioration in the travel services balance, as well as the transport services balance, while the other services balance improved. Travel receipts dropped by 77.0% and non-residents' arrivals by 76.1% year-on-year, while transport receipts decreased by 18.3%.

Capital account

In October 2020, the capital account showed a surplus of €507 million, against a small deficit of €8 million in the same month of the previous year, owing to higher net EU capital transfers to the general government. In the January-October 2020 period, the capital account surplus registered an increase of €1.6 billion year-on-year, owing, mainly, to a rise in EU capital transfers to the general government, to stand at €1.8 billion.

Combined current and capital account

In October 2020, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €261 million, compared with a deficit of €686 million year-on-year. In the January-October 2020 period, the combined current and capital account recorded a deficit of €7.5 billion, compared with a deficit of €562 million year-on-year.

Financial account

In October 2020, under direct investment, residents' external assets rose by €46 million. Residents' external liabilities, which represent non-residents' direct investment in Greece, increased by €205 million.

Under portfolio investment, a decrease in residents' external assets is chiefly attributable to a decline of €104 million in residents' holdings of foreign bonds and Treasury bills, while a small drop was observed in residents' net external liabilities.

Under other investment, an increase in residents' external assets mainly reflects a rise of €495 million in loans extended to non-residents. A rise in their liabilities reflects chiefly an increase of €190 million in non-residents' deposit and repo holdings in Greece (the TARGET account included), as well as a €135 million increase in the outstanding debt of the public and the private sector to non-residents.

In the January-October 2020 period, under direct investment, residents' external assets rose by €541 million and residents' net external liabilities, which represent non-residents' direct investment in Greece, increased by €2.6 billion.

Under portfolio investment, a net rise in residents' external assets is due to an increase of €33 billion in residents' holdings of foreign bonds and Treasury bills. A net decline in residents' external liabilities is mainly due to a decrease of €8.1 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 a statistical adjustment (by €2.6 billion) associated with the issuance of banknotes. A net rise in residents' liabilities reflects chiefly an increase of €42 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.

At end-October 2020, Greece's reserve assets stood at €9.7 billion, compared with €7.4 billion at end-October 2019.

Note: Balance of payments data for November 2020 will be released on 20 January 2021.

^[1] It is pointed out that developments under portfolio and other investment were largely driven by loan securitisations carried out by systemic credit institutions.