Monthly developments in September 2002 and the international investment position of the euro area as at end-2001

The cumulated current account balance during the first three quarters shifted from a deficit of EUR 22.9 billion last year to a surplus of EUR 37.2 billion in 2002. This turnaround was largely the result of a substantial increase in the goods surplus (of EUR 51.1 billion) and, to a lesser extent, of an increase in the services surplus (of EUR 6.5 billion), while the deficits for both income and current transfers showed marginal declines. The rise in the goods surplus was mostly due to a significant decline in the value of imports (of 4.9%) – partly reflecting the lower average price of oil imports in the first nine months of this year compared with the same period last year. At the same time, the export value showed a modest increase of 2.1%. In the financial account, the euro area recorded net inflows of EUR 12.4 billion of combined direct and portfolio investment in September 2002. Net inflows of EUR 15.8 billion in portfolio investment accounted for this development, as direct investment of the euro area registered net outflows of EUR 3.4 billion. The net inflows of portfolio investment of the euro area in September 2002 are mostly accounted for by net inflows of equity portfolio investment (EUR 12.1 billion). This was complemented by net inflows of debt instruments amounting to EUR 3.8 billion.

Euro area net international investment position as at end-2001

The newly available data on asset positions show a large increase in the total assets, from EUR 5,796.7 billion at end-1999 to EUR 7,459.4 billion at end-2001. Most i.i.p. components contributed to much of this growth of 28.7% over two years. The liability positions rose to a lesser extent, to EUR 7,611.6 billion, which predominantly reflects an increase in direct and "other" investment liabilities. For portfolio investment liabilities, the strong rise in foreign holdings of debt securities, from EUR 1,241.2 billion to EUR 1,604.9 billion, was partly offset by a decrease in equity portfolio liabilities, from EUR 1,698.1 billion at end-1999 to EUR 1,577.6 billion at end-2001.

The euro area current account registered a surplus of EUR 8.0 billion in September 2002 compared with a surplus of EUR 0.7 billion in September 2001. This was primarily due to an increase in the goods surplus (from EUR 6.0 billion to EUR 11.3 billion) combined with a higher surplus for services (from EUR 0.4 billion to EUR 3.9 billion), which was only partially offset by a small increase in the income deficit. Meanwhile, the deficit for current transfers remained broadly unchanged. Turning to month-on-month developments on the basis of seasonally adjusted data, the export value of goods in September remained at roughly the same level as in August and imports increased slightly. As regards services, the value of exports showed a significant increase in September compared with August (from EUR 27.0 billion to EUR 29.1 billion), while imports registered a marginal decline over the same period. The limited net outflows in direct investment in September are due to net outflows in equity direct investment (EUR 3.9 billion), which more than outweighed the small net inflows in other capital, consisting mostly of inter-company loans (EUR 0.5 billion). On a cumulated basis for the first nine months of 2002, combined direct and portfolio investment registered net inflows of EUR 25.1 billion in 2002, compared with net outflows of EUR 85.2 billion a year earlier. This reversal from large net outflows to net inflows reflects a) a sharp reduction in net outflows of direct investment, from EUR 118.0 billion in the period January-September 2001 to EUR 24.7 billion during the same period in 2002, and b) an increase in net inflows of portfolio investment, from EUR 32.8 billion in 2001 to EUR 49.8 billion so far in 2002. At the end of 2001, the international investment position (i.i.p.) of the euro area vis-à-vis the rest of the world recorded net liabilities of EUR 152.2 billion (representing 2.2 % of GDP). That is substantially less than at the end of 2000, when net liabilities equalled EUR 414.7 billion, or 6.3% of euro area GDP (see Annex Table 3). This sizeable reduction in the net debtor position between 2000 and 2001 is explained by a stronger increase in assets than in liabilities in the direct and portfolio investment categories.

Additional information on the sharing of responsibilities regarding the compilation of the euro area and EU15 b.o.p. and on the international investment position of the euro area

Eurostat's Euro-indicators News Releases The i.i.p. of the euro area vis-à-vis the rest of the world contains net external stocks of direct and portfolio investment, financial derivatives, other investment and reserve assets. This statistic thereby complements the b.o.p., which records flows of assets and liabilities in the financial account. The changes in the international investment position between year-ends are partly explained by the b.o.p. flows during the year. In addition, the stock data also reflect valuation effects arising from changes in asset prices and exchange rates, and other changes not related to flows. Until recently, the euro area i.i.p. had been compiled by simply aggregating euro area countries' net national data on their year-end external positions. Starting this month, data are published based on a separate reporting by euro area countries of positions vis-à-vis non-resident counterparts. This enables a split of the i.i.p. into assets and liabilities, which may considerably enhance its information content and analytical value. ECB Monthly Bulletin

Annexes

The methodology used for balance of payments statistics has been developed in close co-operation with the European Commission (Eurostat), which publishes the balance of payments for the European Union (   ). The ECB compiles balance of payments statistics for the euro area on the basis of the data on transactions with residents of countries outside the euro area. The results up to September 2002 will also be published in the December 2002 issue of the . A detailed methodological note is available on the ECB's website.

Table 1 Table 2 Table 3

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: Monthly balance of payments of the euro area for 2001 and 2002. : Euro area current account - seasonally adjusted data (Euro 12). : International investment position of the euro area (Euro 12). Reproduction is permitted provided that the source is acknowledged