C/A deficit widens further

Greece’s current account deficit widened by 19.3 percent to 2.28 billion euros in the January-February period as a slight increase in exports was canceled out by the hike in the oil bill, statistics released by the Bank of Greece yesterday showed. The trade deficit in the first two months remained unchanged at 3.85 billion euros as the jump in oil prices in the runup to the war in Iraq jacked up the cost of imports, which also offset a marginal rise in non-fuel exports. The trade deficit in February improved by 4.68 percent to stand at 1.77 billion euros. Non-oil exports would have gone up by a bigger margin were it not for the rising euro, said Alpha Bank economist Dimitrios Maroulis. He said the improvement could have come from increased exports of citrus fruits to markets in the Middle East and the Balkans. The service surplus from January to February rose to 647 million euros on the back of higher transportation receipts, taking the sting out of lower tourist receipts. Tourist bookings up to April fell by 10-20 percent as the conflict in Iraq caused travelers to put off their vacations. The lower inflow of EU funds trimmed the transfers surplus to 1.39 billion euros, down 14 percent. Foreign investors’ continued strong interest in Greek government bonds led to a net inflow of 2.07 billion euros in portfolio investment. Proton Investment Bank economist Christos Avraamides said the current account figures are a cause for concern. «We have a large current account deficit, which is financed by portfolio investments, net borrowings by the government in essence,» he said. He said the pattern is expected to continue for the rest of the year, which constitutes «a very negative development for the future.» Greece’s reserve assets at end-February came to 7.2 billion euros.