Greece΄s current account deficit shrank in December from the same month a year earlier as a lower trade gap helped to offset a drop in the services balance surplus, according to the Bank of Greece data.
The central bank, in a report, attributed this development to the improved balance of goods and services, which recorded a deficit of 235 million euros, compared with a deficit of 4.0 billion in 2014. Overall, the value of exports of goods and services fell by 8.8 pct, but the value of imports decreased at a faster pace of 14.3 pct.
In 2015, the deficit of the balance of goods registered a considerable fall of 5.0 billion euros, due to an amelioration in all sub-accounts. More specifically, the oil balance improved significantly, on account of lower international oil prices. In addition, transactions concerning purchases and sales of ships were also significantly reduced, largely due to the fact that they are conducted outside the Greek banking system as a result of capital controls. Finally, it should be noted that exports of goods excluding oil and ships rose by 4.6 pct, while the corresponding imports declined by 1.5 pct.
Improvement in the balance of goods
“This amelioration is attributable to the improvement in the balance of goods,” the central bank said.
“The value of exports of goods and services declined by 13.8 percent, but the value of imports fell more – by 16.8 percent – so the deficit of the balance of goods and services shrank by 371 million euros.”
The data showed the deficit reached 780 million euros from 1.87 billion euros in December 2014. Tourism revenues rose by 12.2 percent year-on-year to 205 million.
The surplus of the services balance shrank in 2015, as net transport receipts registered a decline, which is also largely attributable to capital controls. This development was partly offset by a rise in net travel and other services receipts. In 2015, total non-residents’ arrivals increased by 7.1 pct, while the corresponding receipts grew by 6.0 pct. In 2015, the primary income account showed a surplus of 739 million euros, up by 166 million year-on-year, on account of lower net interest, dividend and profit payments, as well as of lower payments for wages and salaries. This improvement almost offset the deterioration in the secondary income account. In 2015, residents’ net assets from direct investment abroad rose by 345 million euros, while the corresponding liabilities that represent non-residents’ direct investment in Greece dropped by 258 million.
December deficit
Under portfolio investment, a net increase of 7.0 billion euros in residents’ external assets is mainly due to a rise of 6.4 billion euros in their investment in shares of foreign firms. Moreover, residents’ net external liabilities fell by 1.4 billion, mainly on account of a decline in non-residents’ investment in Greek government bonds and Treasury bills, which was offset to a large extent by a rise in non-residents’ investment in shares of Greek firms.
Under other investment, a net increase in residents’ external assets and liabilities largely reflects the statistical adjustment associated with the issuance of banknotes. In addition, regarding assets, residents’ deposit and repo holdings abroad registered a net rise of 1.3 billion. On the liabilities side, a net increase of 5.3 billion was recorded in non-residents’ deposit and repo holdings in Greece (the TARGET account included) and a net rise of 3.1 billion in residents’ outstanding debt.
At the end of 2015, Greece’s reserve assets stood at 5.5 billion euros, compared with 5.1 billion at end-2014.
In December 2015, the current account showed a deficit of 0.8 billion euros, down by 1.1 billion year-on-year. The value of exports of goods and services declined by 13.8 pct, but the value of imports fell more (16.8 pct), so the deficit of the balance of goods and services shrank by 371 million euros.
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