The five-month current account deficit increased significantly, to 10.1 billion euros

The five-month current account deficit increased significantly, to 10.1 billion euros

In the period January-May 2022, the current account deficit increased significantly compared to the same period in 2021 according to the Bank of Greece, due to the deterioration primarily of the goods balance and secondarily of the primary income balance, which was to some extent offset from the improvement of balances of services and secondary incomes.

At the same time, in May 2022, the current account deficit increased compared to the corresponding month of 2021.

In particular, according to the relevant announcement:

Current Account Balance

In May 2022, the current account deficit increased by EUR 646.6 million compared to May 2021 to EUR 2.0 billion.

The increase in the goods balance deficit is due to the increase in imports, which was greater than that of exports. Exports increased by 49.2% at current prices (8.6% at constant prices) and imports by 59.9% at current prices (32.5% at constant prices). In particular, exports of non-fuel goods increased by 43.2% at current prices (22.6% at constant prices) and imports of non-fuel goods increased by 46.2% at current prices (35.9% at constant prices ).

The increase in the surplus of the services balance is due to the improvement primarily of the travel services balance, as well as of the other sub-balances. Non-resident traveler arrivals increased by 672.5% and related receipts by 536.4% compared to 2021, representing 92.4% and 90.3% of the respective 2019 levels. The transport balance surplus increased due to the improvement in the maritime transport balance surplus.

The primary income balance surplus recorded a decrease compared to the corresponding month of 2021, mainly due to the decrease in net receipts from other primary incomes. The secondary income balance deficit more than doubled compared to the corresponding month in 2021, due to the increase in payments on the general government balance.

In the period January-May 2022, the current account deficit showed a significant increase of 4.1 billion euros compared to the corresponding five months of 2021 and amounted to 10.1 billion euros.

The increase in the goods balance deficit is due to the greater increase in imports over exports. More specifically, exports increased by 35.2% at current prices (3.8% at constant prices) and imports increased by 48.2% at current prices (23.0% at constant prices). In particular, at current prices exports and imports of non-fuel goods increased by 26.9% and 33.8% respectively (10.9% and 24.9% at constant prices).

The increase in the surplus of the services balance is due to the improvement mainly of the balance of travel services, as well as of the balances of transport and other services. Non-resident traveler arrivals increased by 552.9% and related receipts by 547.9% compared to 2021, representing 81.7% and 87.8% of the respective 2019 levels. Net transport receipts showed an increase of 23.4%.

The surplus of the primary income balance decreased compared to the same period in 2021, mainly due to the decrease in net receipts from other primary incomes, while the secondary income balance also registered a surplus, against a deficit, due to the decrease in net payments in the general sector. government.

Capital Balance

In May 2022, the capital balance surplus decreased by €51 million compared to May 2021 and stood at €151.6 million. In the period January-May 2022, the capital balance surplus more than doubled compared to the same period in 2021 to €1.1 billion, due to the increase in net receipts of the general government sector.

Total Current and Capital Balance

In May 2022, the overall current and capital account deficit (which corresponds to the economy’s external financing needs) increased to €1.9 billion, up from €1.2 billion in May 2021. January-May 2022 period, the deficit in the total current and capital balance increased by 3.4 billion euros compared to the corresponding period of 2021 and amounted to 9.1 billion euros.

Balance of Financial Transactions

In May 2022, in the category of direct investments, the claims of residents against abroad recorded an increase of 35.7 million euros, while the liabilities of residents against abroad showed an increase of 445.5 million euros without notable transactions.

In portfolio investments, the increase in residents’ foreign claims is almost entirely due to the 2.3 billion euro increase in their investments in foreign bonds and interest-bearing bonds. The increase in their liabilities is mainly due to the increase of 728.0 million euros in the placements of non-residents in bonds and bonds of the Greek State.

In the category of other investments, a decrease was recorded in the residents’ claims against abroad, due to the decrease of 724.0 million euros in the placements of residents in deposits and repos abroad and the decrease of 386.9 million euros in the granting of loans to non-residents residents, which was partially offset by the statistical adjustment related to the issuance of banknotes (by 652.0 million euros). The increase in their liabilities reflects the €1.6 billion increase in non-resident placements in deposits and repos in Greece (including the TARGET account) and, to a lesser extent, the statistical adjustment related to the issuance of banknotes (by 652 .0 million euros), which were partially compensated by the reduction by 377.5 million euros of the residents’ debt obligations vis-a-vis abroad.

In the period January-May 2022, in the category of direct investments, the claims of residents towards abroad increased by 275.3 million euros and the liabilities of residents towards abroad, which correspond to direct investments of non-residents in Greece, recorded an increase by 3.5 billion euros.

In portfolio investments, the net increase in the claims of residents vis-a-vis abroad is mainly due to the increase of 7.5 billion euros in placements of residents in bonds and interest-bearing bills abroad. The net increase in their liabilities is mainly due to the increase of 3.3 billion euros in the placements of non-residents in bonds and interest-bearing bonds of the Greek State.

In the category of other investments, the decrease in the claims of residents vis-a-vis abroad is due to the fall of 3.2 billion euros in placements of residents in deposits and repos abroad, which was partially offset by the statistical adjustment linked to the issuance of banknotes ( by 2.3 billion euros). The increase in their liabilities mainly reflects the €5.3 billion rise in non-resident placements in deposits and repos in Greece (including the TARGET account) and the statistical adjustment linked to the issuance of banknotes, and was partially offset by reduction by 2.0 billion euros of their loan obligations to non-residents.

At the end of May 2022, the country’s foreign exchange reserves stood at 10.8 billion euros, compared to 8.7 billion euros at the end of May 2021.

It is noted that the statistics for the Balance of Payments for the month of June 2022 will be announced on August 19, 2022.

Source: Capital