The Bank of Greece has published its latest divs on the balance of payments for July 2016

Current account

InJuly 2016, the current account showed a surplus of €1.4 billion, down by €1.1 billion year-on-year. This development is mainly attributable to an increase in the deficit of the balance of goods and, to a lesser extent, to a deterioration in the other balances that make up the combined account.

The deficit of the balance of goods doubled mainly on account of a significant rise in imports, compared with imports in July 2015, which had registered a sharp drop year-on-year due to the imposition of capital controls. It should be noted that imports in July 2016 remain well below their level in 2013 and 2014. In July 2016, exports declined, mainly due to a fall in the value of oil exports. It should be noted that, although total exports of goods declined by 2.9% at current prices, at constant prices they rose by 6.2%. In addition, exports of goods excluding oil increased by 2.8% at constant prices.

The surplus of the services balance declined by €139 million, as a result of lower net travel and other services receipts. By contrast, net transport receipts were higher year-on-year, on account of the improved sea transport balance. As regards travel services in July 2016, both receipts and non-residents’ arrivals declined by 3.5% and 2% respectively.

In July 2016, the primary and the secondary income accounts showed higher deficits year-on-year. The deterioration in the primary income account is mainly attributable to higher net dividend payments, while the deterioration in the secondary income account results mainly from developments in general government.

In theJanuary-July 2016period, the current account balance improved by €306 million year-on-year and showed a deficit of €1.1 billion. This development is attributable to an improvement in the primary and the secondary income accounts, while the balance of goods and services deteriorated.

The balance of goods showed an improvement of €653 million, which reflects the improved oil balance owing to lower oil prices and reduced net payments for purchases of ships, as a large part of the relevant transactions are conducted outside the domestic banking system after the imposition of capital controls. The balance of goods excluding oil and ships deteriorated mainly on account of aforementioned developments in July. It should be noted that, at constant prices, total exports of goods grew by 6%, reflecting mainly a rise in the volume of oil exports, while exports of goods excluding oil remained almost unchanged.

The surplus of the services balance dropped by €1.6 billion in the January-July 2016 period, due to a significant decline in net transport receipts, which is largely attributable to capital controls. Net travel receipts also recorded a fall. Total non-residents’ arrivals increased by 1.1%, while the corresponding receipts declined by 4.8%. These developments were offset to a small extent by an improvement in the other services balance.

The primary income account showed a surplus of €930 million, up by €887 million year-on-year. The secondary income account also improved.

Capital account

InJuly 2016, the capital account showed a small deficit, against a surplus in July 2015, while in theJanuary-July 2016period it showed a surplus of €642 million, up by €34 million year-on-year.

Combined current and capital account

InJuly 2016, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a surplus of €1.4 billion, down by €1.1 billion year-on-year. In theJanuary-July 2016period, a deficit of €428 million was recorded, down by €340 million year-on-year.

Financial account

InJuly 2016, direct investment recorded an increase of €93 million in residents’ external assets, which is mainly attributable to an outflow of €100 million due to the participation of OPAP S.A. in the capital increase of OPAP INVESTMENT LTD in Cyprus. Residents’ external liabilities (non-residents’ direct investment in Greece) recorded a net increase of €30 million, without any notable transactions.

Portfolio investment showed an increase of €4.9 billion in residents’ net external assets, mainly as a result of a rise of €5.0 billion in residents’ holdings of foreign bonds and Treasury bills. This development was partly offset by a decrease of €156 million in residents’ investment in foreign equities. On the liabilities side, a decrease of €2.0 billion was recorded, which reflects a fall in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, a decline of €3.6 billion in residents’ assets is mainly the result of a €2.9 billion decrease in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, and of a €609 million drop owing to the statistical adjustment related to the issuance of banknotes. A €2.5 billion rise in liabilities reflects a net increase of €3.3 billion in non’ residents’ deposit and repo holdings in Greece (the TARGET account included), which was partly offset by a decrease of €789 million owing to the statistical adjustment related to the issuance of banknotes.

In theJanuary-July 2016period, residents’ net assets from direct investment abroad declined by €1.6 billion, while the corresponding liabilities, that represent non-residents’ direct investment in Greece, increased by €134 million.

Under portfolio investment, residents’ net external assets registered an increase of €5.2 billion, which is mainly attributable to a rise of €6.5 billion in residents’ holdings of foreign bonds and Treasury bills, which was partly offset by a decrease of €1.5 billion in residents’ investment in foreign equities. Residents’ net external liabilities fell by €2.3 billion, mainly on account of a decline in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, a decline of €8.8 billion in residents’ external assets largely reflects a decrease in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, and the statistical adjustment related to the issuance of banknotes (1). On the liabilities side, a drop of €2.0 billion was recorded, which is attributable both to a decrease in non-residents’ deposit and repo holdings in Greece (the TARGET account included) and to the effect of the statistical adjustment. These developments were partly offset by an increase in the outstanding debt of the public and the private sector to non-residents.

At end-July 2016, Greece’s reserve assets stood at €6.9 billion, compared with €5.1 billion one year earlier.

Note: Balance of payments data for August 2016 will be released on 21 October 2016.