Greek Current Account Deficit Down in Jan-May

Greece’s current account deficit dropped by 832 million euros in the January-May period this year to 2.5 billion euros, the Bank of Greece (BoG) said on Monday.
In a report, the central bank said that the current account balance in May 2014 showed a deficit of 246 million euros, against a 70 million surplus in May 2013, as a result of an increase in the deficits of the trade balance mainly, but also the income account balance, as well as a year-on-year shift of the current transfers balance from surplus to deficit. The aforementioned developments were partly offset by an increase in the surplus of the services balance. The trade deficit increased by 345 million euros year-on-year, due to the higher net import bill primarily for oil and secondarily for ships. By contrast, the trade balance, excluding oil and ships, did not show any remarkable change, although export receipts rose faster than the corresponding import payments.
The surplus of the services balance increased by 190 million euros year-on-year, mainly as a result of the higher surplus of the “other” services balance, which largely reflects construction services. The travel services balance improved slightly, as receipts did not rise notably in May 2014, despite a 12.6% increase in non-residents’ arrivals. The slightly increased surplus in the transport services balance reflects almost entirely a rise in the surplus of the sea transport services balance.
In the January-May 2014 period, the current account deficit came to 2.5 billion euros, down by 832 million euros year-on-year. This development is attributable to improvements in the services, income account and current transfers balances, which more than offset the higher trade deficit.
In more detail, as regards to the trade deficit, increased net payments for purchases of ships mainly, which more than doubled, as well as the higher net oil import bill, offset a contraction in the deficit of the balance of goods, excluding oil and ships. This contraction is attributable to the lower import bill, since receipts from exports of goods, excluding oil and ships, remained almost unchanged. As a result, the trade deficit rose by 565 million euros. The 834 million increase in the surplus of the services balance mainly reflects higher net transport receipts and, to a lesser extent, higher net receipts from travel and other services. As regards to travel spending by non-residents in Greece, a year-on-year increase of 10.6% was recorded, reflecting a 17% rise in non-residents’ arrivals, while travel spending by residents abroad rose by 16.3%.
The income account deficit fell by 245 million euros, mainly as a result of lower net interest payments. Finally, the current transfers balance showed a surplus of 2 billion euros, up by 318 million year-on-year. This development is attributable to a rise in general government transfer receipts (mostly from the EU).
In the January-May 2014 period, non-residents’ direct investment in Greece showed a net inflow of 881 million, while residents’ direct investment abroad showed a net outflow of 258 million.
Under portfolio investment, a net inflow of 5.1 billion was recorded, mainly due to a rise in non-residents’ holdings of Greek firms’ shares. These developments were partly offset by a net increase in residents’ holdings of foreign bonds and Treasury bills, as well as foreign financial derivatives.
Under “other” investments, a net outflow of 4.4 billion was recorded, mainly as a result of a decrease in non-residents’ deposits and repo holdings in Greece, which was partly offset by a net rise in the outstanding debt of both the public and the private sector to non-residents.
At the end of May 2014, Greece’s reserve assets stood at 5.0 billion, compared with 4.9 billion at the end of May 2013.
(source: ana-mpa)

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