Balance of Payments: June 2020

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Balance of Payments: June 2020 20/08/2020 - Press Releases

Current account

In June 2020, the current account balance showed a deficit of €1.4 billion, against a surplus of €805 million in June 2019. This development is mainly attributable to a deterioration in the travel balance and, therefore, the services balance, which was partly offset by an improvement in the balance of goods, as imports of goods decreased more than the respective exports. The primary and the secondary income accounts did not show any significant change.

A decline in both imports and exports of goods is largely due to a fall in oil exports and imports, which was also due to a drop in international oil prices (at constant prices, oil exports increased by 17.7%). Exports of goods excluding oil declined by 3.1% at current prices (-2.5% at constant prices), while the corresponding imports fell by 2.2% (-1.5% at constant prices).

The travel surplus narrowed, as non-residents' arrivals and the corresponding receipts decreased by 93.8% and 97.5%, respectively. Moreover, travel payments dropped by 81.3%. The transport balance also declined, by 39.7%, due to a deterioration in the sea and air transport balances.

In the first half of 2020, the current account deficit came to €7.0 billion, up by €2.9 billion year-on-year, as the deteriorating services balance and secondary income account more than offset an improvement in the balance of goods and the primary income account.

The deficit of the balance of goods fell, as imports decreased at a faster pace than exports. Developments in imports and exports largely reflected the evolution of oil exports and imports, respectively, as mentioned earlier. Non-oil exports of goods declined by 3.9% at current prices (-3.4% at constant prices), while the corresponding imports fell by 10.1% (‑9.5% at constant prices).

The services surplus stood at €2.2 billion, i.e. at less than a third of the level registered in the first half of 2019, due to a worsening of all sub-components, particularly travel balance. Non-residents' arrivals and relevant receipts fell by 76.9% and 87.5%, respectively. As regards the transport balance, its surplus dropped by 23.6%.

Lastly, it should be noted that a deterioration in the secondary income account, as against the first half of 2019, is attributable to a large extent to the transfer to the Greek State of income earned on ANFA/SMP holdings in May 2019. The relevant payment for 2020 will be registered in the data for July 2020.

Capital account

In June 2020, the capital account was almost balanced, while in June 2019 a surplus was recorded. In the first half of 2020, a surplus of €594 million was registered, up by €316 million year-on-year.

Combined current and capital account

In June 2020, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €1.4 billion, against a surplus of €892 million year-on-year. In the first half of 2020, the deficit stood at €6.4 billion, up by €2.6 billion year-on-year.

Financial account

In June 2020, under direct investment, residents' external liabilities (non-residents' direct investment in Greece) rose by €356 million and their external assets by €120 million, with no remarkable transactions.

Under portfolio investment, an increase in residents' external assets is mainly due to a rise of €4.9 billion in residents' holdings of foreign bonds and Treasury bills. A decrease in residents' external liabilities is mainly due to a decline of €483 million in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, residents' external assets did not show any notable change. An increase in residents' external liabilities almost exclusively reflects a rise of €7.6 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included).

In the first half of 2020, under direct investment, residents' external liabilities stemming from non-residents' direct investment in Greece increased by €1.6 billion.

Under portfolio investment, an increase in residents' external assets is chiefly attributable to a rise (of €19.6 billion) in residents' holdings of foreign bonds and Treasury bills. A decrease in their external liabilities is mainly due to a decline of €7.9 billion in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a rise in residents' external assets (of €2.4 billion) reflects mainly the statistical adjustment associated with the issuance of banknotes. An increase in their external liabilities reflects chiefly a rise of €27.9 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included), as well as a €6.9 billion increase in the outstanding debt of the public and the private sector to non-residents.[1]

At end-June 2020, Greece's reserve assets stood at €8.9 billion, compared with €6.7 billion at end-June 2019.

Note: Balance of payments data for July 2020 will be released on 21 September 2020.

[1] It should be noted that, in the first half of 2020, developments under portfolio investment and other investment are largely due to loan securitisations of systemic credit institutions, carried out in previous months (see Bank of Greece, Press Release: Balance of Payments, March 2020 and April 2020).