By Dimitra Manifava

The Greek current account balance posted a quarterly surplus for the first time since 2005 in Q3 2012, amounting to some 3 billion euros according to data released on Thursday by Eurostat. This compares to a 2-billion-euro deficit in the July-September 2011 period.

While the development is positive, it does not allow for much optimism, for two main reasons: First, it remains to be seen whether this is merely a temporary phenomenon or if it will prove permanent; and second, it is to a significant extent due to the considerable drop in imports caused by the decline in demand and the contraction of production activity, especially in the domains of trade and manufacturing,rather than to the increase in exports.

Regarding the possible temporary character of the surplus, the Bank of Greece data on the current account balance show that in July 2012 it moved into positive territory for the first time since May 2010, amounting to 642 million euros, against a deficit of 880 million in July 2011. Then in August the surplus grew to 1.6 billion euros before dropping to 774,6 million in September. Nevertheless October, the most recent month for which the figures are available, showed a deficit of 684.2 million euros, about half of that posted in October 2011.

There is no doubt that the drop in consumption in the local market has led many enterprises that were already active in exports to strengthen their presence in foreign markets, while other firms have looked to international competition for the first time.

With the exception of February 2012, the value of Greek exports has been on the rise and from September onward it was close to 2 billion euros on a monthly basis. In the period from January to October 2012, exports reached a total of 18.17 billion euros, from 16.84 billion in the same period in 2011 and 13.7 billion in the first 10 months of 2010.

Imports, on the other hand, shrank from 39.93 billion euros in the first 10 months of 2011 to 35.27 billion in January-October period last year, with most of the reduction coming from payment for non-fuel-related goods, according to the BoG figures.

The surplus recorded in Q3 was also due to the PSI debt restructuring, as the balance concerning interest, dividends and profits showed a surplus of 160 million in September 2012, against a deficit of 909 million in September 2011. The service balance in Q3 last year showed a surplus of 7.5 billion euros, mostly thanks to tourism.