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Economy

Greek Current Account Deficit Increased by 2.9 Billion Euros in Jan-July

September 20, 2022

ATHENS – The Greek current account deficit recorded an increase of 2.9 billion euros in the January-July period, compared with the same period last year, and stood at 9.7 billion euros, the Bank of Greece said on Tuesday.

More specifically, the central banks said that in July the current account surplus grew by 533.9 million year-on-year and stood at 1.1 billion euros. A rise in the deficit of the balance of goods is accounted for by a larger, in absolute terms, increase in imports than in exports. Exports grew by 40.7% at current prices (4.0% at constant prices) and imports rose by 39.9% at current prices (16.0% at constant prices). In particular, non-oil exports of goods grew by 21.9% at current prices (3.8% at constant prices) and non-oil imports of goods rose by 22.7% at current prices (14.9% at constant prices). A rise in the services surplus is due to an improvement in, primarily, the travel balance and, secondarily, the transport balance, while the surplus of the other services balance fell. Non-residents’ arrivals rose by 87.3% and the relevant receipts by 62.7% year-on-year. It should be noted that, compared with July 2019, arrivals stood at 93.0% and receipts marginally exceeded the corresponding level. The surplus of the transport balance increased on the back of an improvement in the sea transport surplus.

The primary income account deficit fell year-on-year, owing to lower net interest, dividend and profit payments. The secondary income account surplus fell year-on-year, mainly as a result of lower net receipts in the general government balance.

A rise in the deficit of the balance of goods is due to the fact that imports increased more than exports. In particular, exports grew by 39.9% at current prices (5.3% at constant prices) and imports increased by 47.6% at current prices (21.6% at constant prices). Specifically, non-oil exports and imports of goods grew by 26.6% and 30.9%, respectively, at current prices (10.0% and 22.0% at constant prices). A rise in the surplus of the services balance is mainly due to an improvement in the travel balance, as well as in the transport and other services balances. Non-residents’ arrivals rose by 191.4% and the relevant receipts by 154.2% year-on-year, representing 87.9% and 97.1% of the respective levels in 2019. Net transport receipts increased by 33.4%. The surplus of the primary income account fell year-on-year, mainly due to a decline in net receipts under other primary income. The surplus of the secondary income account rose due to an improvement in the other sectors of the economy, as well as in general government.

In July, the capital account registered a surplus – against a small deficit in July 2021 – of 475.7 million euros, mainly due to higher general government net receipts. In the seven-month period, the capital account surplus almost tripled year-on-year and stood at 2.0 billion, mainly owing to a rise in general government net receipts.In July, the surplus of the combined current and capital account (corresponding to the economy’s external financing requirements) tripled and reached 1.6 billion. In the January-July period, the deficit of the combined current and capital account increased by 1.6 billion year-on-year and stood at 7.8 billion euros.

Under direct investment, residents’ external assets increased by 0.8 billion and residents’ external liabilities declined by 257.7 million, without any remarkable transactions. Under portfolio investment, an increase in residents’ external assets is attributable to a rise of €78.0 million in residents’ holdings of foreign bonds and Treasury bills and to an increase of 144.8 million in their holdings of foreign equities. Under other investment, a drop in residents’ external assets is due to a decrease of 584.0 million in residents’ deposit and repo holdings abroad, which was partly offset by a 327.0 million statistical adjustment associated with the issuance of banknotes and a rise of 208.7 million in loans extended to non-residents.

In the January-July period, under direct investment, residents’ external assets increased by 1.1 billion and residents’ external liabilities, which represent non-residents’ direct investment in Greece, rose by 4.1 billion. Under portfolio investment, a net rise in residents’ external assets is mainly due to an increase of 9.6 billion in residents’ holdings of foreign bonds and Treasury bills. A net increase in their liabilities is almost exclusively due to a rise of 2.2 billion in non-residents’ holdings of Greek bonds and Treasury bills. Under other investment, a drop in residents’ external assets is due to a decline of 4.7 billion in residents’ deposit and repo holdings abroad, which was partly offset by a 3.1 billion statistical adjustment associated with the issuance of banknotes.

At the end of July 2022, Greece’s reserve assets stood at 11.0 billion euros, compared with 9.4 billion at end-July 2021.

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