Euro area monthly balance of payments (October 2016)

• In October 2016 the current account of the euro area recorded a surplus of €28.4 billion.
• In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €83 billion and net incurrences of liabilities of €17 billion.

Current account

The current account of the euro area recorded a surplus of €28.4 billion in October 2016 (see Table 1). This reflected surpluses for goods (€26.0 billion), services (€9.3 billion) and primary income (€6.1 billion), which were partly offset by a deficit for secondary income (€13.0 billion).

The 12-month cumulated current account for the period ending in October 2016 recorded a surplus of €344.3 billion (3.2% of euro area GDP), compared with one of €320.2 billion (3.1% of euro area GDP) for the 12 months to October 2015 (see Table 1 and Chart 1). This was due to increases in the surpluses for goods (from €340.2 billion to €364.8 billion) and services (from €60.0 billion to €62.4 billion), as well as a decrease in the deficit for secondary income (from €132.5 billion to €129.9 billion). These were partly offset by a decrease in the surplus for primary income (from €52.6 billion to €47.1 billion).

Financial account

In October 2016 combined direct and portfolio investment recorded net acquisitions of assets of €83 billion and net incurrences of liabilities of €17 billion (see Table 2).

Euro area residents recorded net acquisitions of €95 billion of direct investment assets as a result of net acquisitions of both debt instruments (€54 billion) and equity (€41 billion). Direct investment liabilities increased by €27 billion as a result of net acquisitions of euro area equity by non-euro area residents.

As regards portfolio investment assets, euro area residents made net disposals of foreign securities amounting to €13 billion. This resulted from net sales/amortisations of short-term debt securities (€34 billion), which were only partly offset by net acquisitions of foreign equity and long-term debt securities (€13 billion and €8 billion respectively). Portfolio investment liabilities recorded a net decrease of €9 billion as a result of net sales/amortisation of euro area short-term debt securities (€20 billion) by non-euro area residents, which were partly offset by net acquisitions of euro area long-term debt securities (€11 billion) by non-euro area residents.

The euro area net financial derivatives account (assets minus liabilities) recorded positive net flows of €9 billion.

Other investment recorded increases of €155 billion in assets and €237 billion in liabilities. The net acquisition of foreign assets by euro area residents is mainly attributable to the MFI sector (excluding the Eurosystem) (€159 billion). The net incurrence of liabilities can also be explained by the MFI sector (excluding the Eurosystem) (€218 billion) and, to a limited extent, by other sectors (€16 billion).

In the 12 months to October 2016 combined direct and portfolio investment recorded increases of €779 billion in assets and €80 billion in liabilities, compared with increases of €1,195 billion and €851 billion respectively in the 12 months to October 2015. The most significant development was a shift in portfolio investment liabilities from net acquisitions of euro area securities by non-euro area residents (€383 billion) to net sales/amortisations (€70 billion).

Direct investment recorded decreases in the net acquisition of assets (from €748 billion to €354 billion) and in the net incurrence of liabilities (from €467 billion to €150 billion) in the 12 months to October 2016. The former resulted from a decrease in the net acquisition of foreign debt instruments (from €226 billion to €13 billion) and equity (from €522 billion to €342 billion) by euro area residents.

According to the monetary presentation of the balance of payments, the net external assets of euro area MFIs decreased by €244 billion in the 12 months to October 2016, compared with a decrease of €3 billion in the 12 months to October 2015. This reflected an increase in the surplus in the current and capital account balance (from €302 billion to €346 billion), which was offset by net financial transactions by non-MFIs. In particular, the cumulated transactions in portfolio investment liabilities issued by non-MFI euro area residents showed a shift from net purchases of debt securities by non-euro area investors (€220 billion) to net sales/amortisations (€187 billion).

In October 2016 the Eurosystem’s stock of reserve assets decreased by €9.7 billion to €717.3 billion (see Table 3). This can largely be explained by negative price revaluations, particularly of monetary gold (€8.1 billion).

Data revisions

This press release incorporates revisions for the period from July to September 2016. These revisions resulted in an increase of the direct investment account by €39 billion for September 2016 and of the portfolio investment account by €18 billion for August 2016.

Additional information

Time series data: ECB’s Statistical Data Warehouse (SDW)

Methodological information: ECB’s website

Monetary presentation of the balance of payments Next press releases:

• Quarterly balance of payments and international investment position: 13 January 2017 (reference data up to the third quarter of 2016);
• Monthly balance of payments: 19 January 2016 (reference data up to November 2016);

Annexes

Table 1: Current account of the euro area

Table 2: Balance of payments of the euro area

Table 3: Reserve Assets of the euro area

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