Bank of Greece: Greek current account deficit up in Jan-May

Greece’s current account showed a surplus of 301 million euros in May, up by 263 million year-on-year, mainly due to an improvement in the secondary income account, as well as in the services balance and in the primary income account, the Bank of Greece said in a report on Friday.

The balance of goods showed a deficit that was higher by 756 million year-on-year. This development is attributable, on the one hand, to a deceleration in export growth, resulting from a decrease in the value of oil exports, and, on the other, to a pick-up in import growth. Total exports of goods rose by 3.7% (4.1% at constant prices). Specifically, non-oil exports of goods grew at a rate of 9.3% (9.2% at constant prices). Imports of goods accelerated significantly, registering increases of 19.6% and 17.3% at current and constant prices, respectively.

The improvement in the surplus of the services balance was moderate, as higher net travel and transport receipts were partly offset by higher net payments for other services. It should be noted that travel receipts increased by 9.3%, despite a 2.6% decline in non-residents’ arrivals.

The improvement in the primary income account is attributable, primarily, to lower net interest, dividend and profit payments and, secondarily, to higher net receipts from other primary income, which includes taxes and subsidies on products and production. Finally, the significant improvement in the secondary income account is accounted for by the transfer of income earned on SMP/ANFA holdings and the reimbursement of the step-up interest rate margin.

In the January-May period, the current account showed a deficit of 4.8 billion euros, up by 124 million year-on-year. This development is attributable to an increase in the deficit of the balance of goods, which was largely offset by a rise in the surplus of the services balance and an improvement in the primary and secondary income accounts.

The deficit of the balance of goods grew due to a slowdown in export growth, combined with a sustained increase in imports. Total exports of goods rose by 3.7% at current prices and 1.1% at constant prices, while non-oil exports of goods grew by 6.8% both at current and at constant prices. Oil exports are on a downward path, despite an increase in the corresponding imports, which resulted in a significant widening of the deficit of the oil balance. Total imports of goods increased by 8.5% at current prices (6.3% at constant prices).

The rise in the surplus of the services balance is due to an improvement in, primarily, the transport balance and, secondarily, the travel balance, while the deficit of the other services balance widened. Transport (mainly sea transport) receipts rose by 8.8%. At the same time, travel receipts increased by 14.4%, even though non-residents’ arrivals showed a small decline of 0.9%.

At the end of May 2019, Greece’s reserve assets remained unchanged year-on-year, at 6.4 billion euros.