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Economy

Bank of Greece: Travel Receipts Plunged 84.4% in July

September 21, 2020

ATHENS — Travel receipts plunged 84.4 pct in July compared with the same month last year, totaling 577 million euros from 3.7 billion euros, respectively, while non-residents' arrivals fell 85.4 pct in the same period. In the seven-month period from January to July, travel receipts plunged 86.3 pct to 1.255 billion euros from 9.16 billion euros in 2019, the Bank of Greece said in a report on Monday.

The central bank said that developments in the travel sector negatively affected the country's current account balance. In July, the current account showed a deficit of 875 million, against a surplus of 1.3 billion euros in July 2019, due to a significant deterioration in the services balance, which was only partly offset by the improved balance of goods and primary and secondary income accounts.

A year-on-year decrease in the deficit of the balance of goods by 414 million is attributable to the fact that the drop in imports (by 15.8 pct at current and by 5.2 pct at constant prices) exceeded the decline in exports (by 12.6 pct at current prices), which, however, grew by 4 pct at constant prices. A 3.2-billion-euros decrease in the services surplus is mainly accounted for by lower net travel receipts. The deficit of the primary income account fell mainly on account of lower net interest, dividend and profit payments. Τhe secondary income account turned from deficit to surplus, mainly as a result of the transfer to the Greek State of income earned on ANFA/SMP holdings.

In July, the capital account deficit registered a small increase year-on-year, while in the January-July period the capital account surplus increased. The combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of 898 million, against a surplus of 1.3 billion year-on-year. In the seven-month period, the combined current and capital account recorded a deficit of 7.3 billion euros, against a deficit of 2.5 billion year-on-year. Under direct investment, residents' external liabilities (non-residents' direct investment in Greece) rose by 365 million and their external assets by 42 million, with no remarkable transactions. Under portfolio investment, an increase in residents’ external assets is almost entirely attributable to a rise of 8.2 billion euros in their holdings of foreign bonds and Treasury bills, which is mostly associated with a loan securitisation by a systemic credit institution. A decline in residents' external liabilities is mostly due to a decrease of 738 million in non-residents' holdings of Greek government bonds and Treasury bills. Under other investment, a decrease in residents' external assets mainly reflects a decline of 943 million in residents' deposit and repo holdings abroad. An increase in residents’ external liabilities is largely attributable to a rise of 8.8 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included), also including the transaction related to the above-mentioned loan securitisation.

In the January-July period, the current account showed a deficit of 7.9 billion euros, up by 5.2 billion year-on-year. This development is almost exclusively due to a decline in the services surplus, as well as the surplus of the secondary income account, which was partly offset by a significant drop in the balance of goods deficit as well as the drop in the deficit of the primary income account. A decrease in the deficit of the balance of goods is accounted for by a larger decline in imports, in absolute terms, than in exports. Specifically, total exports of goods fell by 13.3% at current prices, but grew by 2.4 pct at constant prices. Total imports of goods decreased by 15.7 pct at current prices (-5.3 pct at constant prices). It should be noted that the drop in exports and imports is largely due to a decline in oil exports and imports respectively, as a result of lower international oil prices.

In the January-July period, under direct investment, residents’ external assets rose by 325 million and residents’ external liabilities, which represent non-residents’ direct investment in Greece, increased by 1.9 billion. Under portfolio investment, a net increase in residents’ external assets is due to a rise of 27.8 billion in residents’ holdings of foreign bonds and Treasury bills. A net decline in residents' external liabilities is mainly due to a decrease of 8.7 billion in non-residents’ holdings of Greek government bonds and Treasury bills. Under other investment, a net rise in residents' external assets reflects mainly an increase (by 1.9 billion) in the statistical adjustment associated with the issuance of banknotes. A net rise in their liabilities reflects chiefly an increase of 36.7 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included), as well as a 6.3 billion rise in the outstanding debt to non-residents.

At the end of July, Greece's reserve assets stood at 9.4 billion euros, compared with 7.0 billion at end-July 2019, mainly on account of valuation changes.

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