C/A deficit shrinks; shipping receipts rise

Greece’s current account deficit shrank 11.4 percent year-on-year in September, helped by a smaller trade deficit and rising shipping receipts, the country’s central bank said yesterday. The Bank of Greece said the current account deficit in the year to September narrowed by an annual 2.9 percent to 17.12 billion euros, or about 7.4 percent of gross domestic product. A key macroeconomic imbalance reflecting eroding competitiveness, Greece’s current account deficit narrowed to 11 percent of GDP last year from 14.5 percent in 2008 as imports slumped due to the recession. Tourism receipts from nonresidents, a key earner for the country’s ailing economy, continued to slump in September, dropping at an annual pace of 5.1 percent to 1.52 billion euros. «The current account deficit shrinks at a slower pace compared to previous months, as increased payments for fuel and shipbuilding dampen the positive effect from exports and shipping receipts,» National Bank economist Nikos Magginas told Reuters. «The drop in tourism receipts is limited to 5.1 percent, bringing the annual pace of the drop in the first nine months of the year to 6.9 percent. This confirms the improvement in tourist arrivals in the peak summer season,» he added. A government decision to reduce the value-added tax rate paid by hotels in 2011 to 6.5 percent, from 11 percent currently, is seen as helping to boost the sector which accounts for about 18 percent of the total 240-billion-euro economy. Another key income earner for the country, shipping, saw an 18 percent rise year-on-year in revenues to 1.3 billion euros in September, the central bank data showed.