10-month C/A deficit grows

Greece’s current account deficit widened 5.5 percent to 5,805 million euros in the January-October period, year-on-year, the Bank of Greece said yesterday. The non-oil trade deficit narrowed by 579 million euros – as a result of a 395-million-euro rise in export receipts and a decline of 184 million in the import bill – and the services surplus grew as net transport receipts more than offset the fall in net travel receipts. However, these favorable developments were offset by a rise in net oil imports of 454 million, a 571-million-euro widening of the income account deficit – as a result of higher net interest payments on Greek government bonds – and a 385-million-euro narrowing of the transfers surplus, reflecting mainly an 11.1 percent decline in EU transfers to the general government. Only in October did the current account deficit narrow considerably year-on-year, mainly as a result of a decrease in the trade deficit and, to a lesser extent, of an increase in the services surplus. The improvement in the trade balance was chiefly due to an increase in non-oil export receipts and a decrease in the net oil import bill. In the financial account balance in the 10 months, there was a net outflow of 273 million euros in direct investment, despite a 398-million-euro inflow for the acquisition of the Papastratos tobacco company by Philip Morris in October. Over the same period, a substantial net inflow of 11,154 million euros was recorded for portfolio investment. This development is mainly linked to an inflow of foreign investors’ funds for the purchase of Greek bonds, which grew considerably in comparison with the same period in 2002. At end-October, Greece’s reserve assets came to 5 billion euros.