C/A shows surplus but stays in red for Jan.-Aug. period

Greece’s current account showed a surplus in August, almost double that of August 2002, reflecting equally a decrease in the trade deficit, an increase in the services surplus and a rise in the transfers surplus, according to data released by the Bank of Greece yesterday. The improvement in the trade balance was the result of a narrower non-oil trade deficit and a lower net oil import bill. Financial flows under direct investment were low, the same as in August 2002, the central bank said. In the January-August 2003 period as a whole, the country’s current account deficit widened further by 390 million euros, or 9 percent, year-on-year, mainly as a result of a widening of the income account deficit and the oil trade deficit, which offset a fall in the non-oil trade deficit and a rise in the services surplus. The non-oil trade deficit decreased by 436 million euros during this period, as export receipts grew by 218 million and the import bill declined by 217 million euros. At the same time, however, the net oil import bill rose by 466 million euros. The income account deficit widened by 510 million euros, mainly due to increased net interest payments on Greek government bonds, associated with a commensurate rise in non-residents’ holdings of such securities since the beginning of 2003. Over the same period, the services surplus grew by 506 million euros, as the increase in net transport receipts more than offset the decrease in net travel receipts. (The travel balance statistics for the January-August 2003 period are not comparable with those in the corresponding period of 2002, as their compilation on the basis of the relevant border survey started in mid-May 2002.) The transfers surplus narrowed by 357 million euros as transfers from the EU to the general government fell, more than offsetting the growth of net transfers to other sectors. However, the central bank noted, the decrease in net transfers from the EU observed in the first months of 2003 has turned into an increase since June. In the financial account balance, a large net inflow of 11,312 million euros was recorded under portfolio investment in the first eight months of 2003. At the same time, residents’ portfolio investment abroad grew appreciably, mainly owing to the purchase by the Bank of Greece of euro-denominated bonds. During the same period, a net outflow of 638 million euros was observed under direct investment. Finally, under «other investment,» a net outflow of 9,211 million was recorded. At the end of August 2003, Greece’s reserve assets stood at 5.1 billion euros.