Euro area quarterly balance of payments and international investment position (third quarter of 2017)

The current account of the euro area showed a surplus of €386.9 billion (3.5% of euro area GDP) in the four quarters to the third quarter of 2017.^[1]

At the end of the third quarter of 2017 the international investment position of the euro area recorded net liabilities of €0.5 trillion (approximately 5% of euro area GDP).

Current account

The current account of the euro area showed a surplus of €129.0 billion in the third quarter of 2017, compared with €94.7 billion in the same quarter of 2016 (see Table 1). The increase in the current account surplus was due to improvements in all components, namely increases in the surpluses for services (from €14.3 billion to €31.6 billion), primary income (from €22.3 billion to €35.4 billion) and goods (from €92.7 billion to €95.3 billion), as well as a decrease in the deficit for secondary income (from €34.6 billion to €33.3 billion).

The increase in the surplus for services resulted from improvements in all the categories shown in Table 1, in particular a decrease in the deficit for other business services (from €11.5 billion to €3.4 billion) and an increase in the surplus for travel (from €10.8 billion to €14.9 billion).

The increase in the primary income surplus resulted primarily from an increase in the investment income surplus (from €17.9 billion to €27.7 billion), which is explained by a decrease in the deficit for portfolio investment income (from €11.7 billion to €6.2 billion) and an increase in the surplus for direct investment (from €29.7 billion to €33.6 billion).

In the four quarters to the third quarter of 2017 the current account of the euro area showed a surplus of €386.9 billion (3.5% of euro area GDP), compared with one of €371.1 billion (also 3.5% of euro area GDP) a year earlier. This rise in the surplus resulted from increases in the surpluses for primary income (from €78.5 billion to €114.0 billion) and services (from €48.6 billion to €66.7 billion). These developments were partly offset by a decrease in the surplus for goods (from €380.1 billion to €350.9 billion) and an increase in the deficit for secondary income (from €136.1 billion to €144.7 billion).

International investment position

At the end of the third quarter of 2017 the international investment position of the euro area recorded net liabilities of €0.5 trillion vis-à-vis the rest of the world (approximately 5% of euro area GDP; see Chart 1). This represented an improvement of €54 billion compared with the second quarter of 2017 (see Table 2).

This change resulted mainly from lower net liabilities for portfolio investment (€2,311 billion, down from €2,439 billion). This movement was partly offset by higher net liabilities for other investment (€802 billion, up from €763 billion) and financial derivatives (€59 billion, up from €47 billion), as well as lower net assets for direct investment (€1,990 billion, down from €2,004 billion) and reserve assets (€675 billion, down from €683 billion).

The improvement in the net international investment position of the euro area in the third quarter of 2017 is explained mainly by net transactions and net positive price changes that were partially offset by net negative exchange rate changes (see Chart 2). For direct investment assets and liabilities, amounts outstanding declined mainly as a result of net disinvestments and negative exchange rate changes. In portfolio investment, assets and liabilities increased owing to net investments and positive price changes, as well as positive other volume changes in liabilities that were only partially offset by negative exchange rate changes.

At the end of the third quarter of 2017 the gross external debt of the euro area amounted to €13.7 trillion (approximately 124% of euro area GDP), which represents a decrease of €125 billion compared with the previous quarter. The net external debt also decreased (by approximately €112 billion); this lower decrease was due to a slight decline in external debt assets.

Data revisions

This press release incorporates revisions to the data for all the reference periods between the first quarter of 2016 and the second quarter of 2017. These revisions were particularly sizeable in the case of direct and portfolio investment in the second quarter of 2017. They primarily reflect improvements in the national contributions to the euro area aggregates.

Additional information

Time series data: ECB’s Statistical Data Warehouse (SDW).

Methodological information Next press releases:

• Monthly balance of payments: 19 January 2018 (reference data up to November 2017).
• Quarterly balance of payments and international investment position: 6 April 2018 (reference data up to the fourth quarter of 2017).

Annexes

Table 1: Current account of the euro area

Table 2: International investment position of the euro area

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