C/A deficit surges in the first two months as ship orders rise

Greece’s current account deficit surged 68 percent to 2 billion euros in the first two months of 2005, year-on-year, largely as a result of a substantial increase in the trade deficit, a narrowing of the transfers surplus and a small rise in the income account deficit, the Bank of Greece said yesterday. These developments were only partly offset by the growth of the services surplus, mainly a 16.6 percent rise in shipping receipts to 1.9 billion euros. The trade deficit grew by 582 million euros over the same period of 2004. Specifically, the non-oil import bill rose 7.3 percent to 351 million euros, while non-oil export receipts were virtually unchanged. However, it should be noted that this deterioration in the non-oil trade deficit is attributable to net payments for the purchase of oceangoing vessels, the central bank said. The increase in net transport receipts more than offset the decline in net travel receipts and the growth of net payments for «other» services. A 324 million year-on-year decline in the transfers surplus is mainly accounted for by a decrease in EU transfers to the central government and, to a lesser extent, a fall in the net receipts of the «other» sectors. In January-February 2005, non-residents’ direct investment in Greece reached 100 million euros, while residents’ direct investment abroad came to 208 million. Over the same period, a net inflow of 1,117 million euros was recorded under portfolio investment, as the outflow of residents’ funds for investment abroad was more than offset by the inflow of non-residents’ funds for investment in Greece (mainly purchases of Greek government bonds and shares in Greek firms).

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