Bank of Greece: Greek current account deficit halved in April

Greece’s current account balance showed a deficit that had almost halved year-on-year in April, as a result of a decrease in the deficit of the balance of goods and services and of a rise in the surplus of the primary income account, which more than offset an increase in the deficit of the secondary income account, the Bank of Greece said on Tuesday.

The central bank, in a monthly report, said that a year-on-year drop of 196 million euros in the deficit of the balance of goods was attributable to a decrease mostly in the deficit of the oil balance and, to a lesser extent, of the non-oil balance of goods. Non-oil exports of goods at current prices remained virtually flat, while they declined by 2.6 pct at constant prices.

A 97 million euros rise in the surplus of the services balance is due to higher net – mainly sea – transport receipts, which offset a drop in net travel and other services receipts. The surplus of the travel balance narrowed, in spite of a 12 pct increase in non-residents’ arrivals and an 11.3 pct rise in the corresponding receipts, owing to a larger increase in spending abroad by residents.

A year-on-year rise of 176 million euros in the surplus of the primary income account is mainly attributable to higher net interest, dividend and profit receipts, and a widening of 59 million in the deficit of the secondary income account is due to a deterioration in the balance of the general government sector.

In the January-April 2017 period, the current account improved, as the deficit declined by 251 million euros year-on-year, to stand at 3.0 billion. This development is attributable to a rise in the surpluses of the services balance and of the primary and the secondary income accounts, which more than offset an increase in the deficit of the balance of goods. The overall balance of goods and services showed a deficit that was by 301 million euros higher year-on-year, as a rise in exports was offset by an increase in imports.

Over the same period, a year-on-year widening in the deficit of the balance of goods is primarily a result of an increase in the deficit of the oil balance. The deficit of the non-oil balance of goods also grew, given that imports increased faster than exports. Specifically, non-oil exports of goods grew by 3.5 pct at constant prices and the corresponding imports by 4 pct. An increase of 441 million euros in the surplus of the services balance is a result of an improvement in all of its main components. More specifically, compared with the January-April 2016 period, travel receipts rose by 2.4 pct and non-residents’ arrivals by 3.2 pct and, in addition, transport receipts grew by 18.9 pct. During the same period, the primary and secondary income accounts improved.

In April 2017, the capital account did not show any considerable change, while in the January-April 2017 period a surplus of 233 million euros was recorded, compared with a surplus of 676 million in the same period of 2016. In April 2017, no remarkable transactions were recorded under direct investment.

Under portfolio investment, a net decrease in residents’ external assets is chiefly attributable to a drop of 841 million euros in residents’ holdings of foreign bonds and Treasury bills, while a net decline in liabilities mainly reflects a fall of 1.1 billion in non-residents’ holdings of Greek government bonds and Treasury bills. Under other investment, a net decrease in residents’ assets reflects principally a drop of 673 million euros in residents’ (credit institutions’ and institutional investors’) deposit and repo holdings abroad.

In the January-April 2017 period, under direct investment, residents’ external assets rose by €908 million and the corresponding liabilities grew by €1.3 billion.

At the end of April 2017, Greece’s reserve assets stood at 6.5 billion euros, compared with 6.8 billion a year earlier.