Euro Zone Current Account Surplus Declines In July

Sep 21, 2007 - The Euro zone current account surplus declined more than expected in July, official data showed Friday.

The European Central Bank, or ECB, revealed that the current account surplus declined to a seasonally adjusted 1.7 billion euros in July, from the 7.3 billion euros registered in June. The number for June was revised up from the 5.9 billion euros estimated earlier. Economists expected the surplus to decline to 3.5 billion euros in July. Surpluses in goods, services and income were partly offset by a deficit in current transfers in July.

The surplus in goods as well as service decreased in July. Trade in goods showed a surplus of 2.6 billion euros in July, down from the 7.9 billion euros in the previous month. Surplus in services declined to 3.0 billion euros from 4.6 billion euros. The shortfall in current transfers widened to 5.2 billion euros from the 5.0 billion euros deficit recorded in June. Meanwhile, the income account showed a surplus of 1.3 billion euros, reversing a deficit of 0.2 billion euros in the prior month.

In the financial account, combined direct and portfolio investment recorded net inflows of 37 billion euros in July, reflecting net purchases of euro area equity securities by non-residents. Within portfolio investment, net inflows in equity securities accounted for by net purchases of euro area equity securities by non-residents. Net outflows in debt instruments resulted mainly on account of net purchases of foreign bonds and notes by euro area residents. Other investment showed net inflows of 28 billion euros.

On an unadjusted basis, the surplus in current account amounted to 3.3 billion euros, smaller than a revised 12.6 billion euros posted in the previous month. The number for June was revised from 11.4 billion euros initially estimated.

During twelve months till July, combined direct and portfolio investment had cumulated net inflows of 188 billion euros compared to a net outflow of 43 billion euros a year ago.