MIL-OSI Europe: Euro area quarterly balance of payments and international investment position: first quarter of 2021

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Source: European Central Bank

5 July 2021

  • Current account surplus at €285 billion (2.5% of euro area GDP) in four quarters to first quarter of 2021, up from €247 billion (2.1% of GDP) a year earlier
  • Geographic counterparts: largest bilateral current account surpluses vis-à-vis United Kingdom (€157 billion) and United States (€68 billion), largest deficit vis-à-vis China (€78 billion)
  • International investment position showed net liabilities of €118 billion (1.0% of euro area GDP) at end of first quarter of 2021

Current account

The current account surplus of the euro area increased to €285 billion (2.5% of euro area GDP) in the four quarters to the first quarter of 2021, up from €247 billion (2.1% of GDP) a year earlier (see Table 1). This increase reflected larger surpluses for services (from €26 billion to €66 billion) and for goods (from €327 billion to €357 billion). These developments were partly offset by a decrease in the surplus for primary income (from €41 billion to €34 billion), and a larger deficit for secondary income, which increased from €147 billion to €172 billion.

The larger surplus for services was mainly due to a decline in the deficit for other business services (from €134 billion to €38 billion) and, to a lesser extent, due to an increase in the surplus for telecommunication, computer and information services (from €97 billion to €104 billion). These developments were partly offset by lower surpluses for travel services (from €42 billion to €8 billion) and transport services (from €21 billion to €11 billion) and by a larger deficit for other services (from €15 billion to €29 billion).

The decrease in the primary income surplus was primarily due to a fall in the surplus for investment income (from €13 billion to €5 billion). This reflected mainly a lower surplus for direct investment income (down from €73 billion to €11 billion), which was partly offset by a smaller deficit for portfolio equity income (down from €113 billion to €63 billion) and by a larger surplus for portfolio debt income (up from €37 billion to €43 billion).

Data for the current account of the euro area

Data on the geographic counterparts of the euro area current account (see Chart 1) show that in the four quarters to the first quarter of 2021 the euro area recorded its largest bilateral surpluses vis-à-vis the United Kingdom (€157 billion, down from €187 billion a year earlier), the United States (€68 billion, down from €115 billion) and Switzerland (€56 billion, down from €61 billion). It also recorded a current account surplus vis-à-vis a residual group of other countries (€196 billion, up from €147 billion). The largest bilateral deficits were recorded vis-à-vis China (€78 billion, up from €67 billion) and EU Member States and EU institutions outside the euro area (€64 billion, up from €19 billion).

The most significant geographic changes in the four quarters to the first quarter of 2021 relative to the previous year were as follows. In the goods balance there was an increase in the surplus vis-à-vis the residual group of other countries (from €26 billion to €91 billion), partly reflecting a decline in the deficit vis-à-vis Russia (from €28 billion to €3 billion), while the deficit vis-à-vis China increased (from €80 billion to €94 billion). In services the deficit vis-à-vis offshore centres declined (from €139 billion to €22 billion), while the deficit vis-à-vis the United States increased (from €27 billion to €87 billion). The surplus vis-à-vis the United Kingdom decreased (from €47 billion to €25 billion). In primary income, a lower deficit was recorded vis-à-vis the United States (down from €29 billion to €13 billion), while in secondary income the deficit vis-à-vis the EU Member States and EU institutions outside the euro area widened from €81 billion to €107 billion.

Chart 1

Geographical breakdown of the euro area current account balance

(four-quarter moving sums in EUR billions; non-seasonally adjusted)

Source: ECB.
Note: “EU non-EA” comprises the non-euro area EU Member States and those EU institutions and bodies that are considered for statistical purposes as being outside the euro area, such as the European Commission and the European Investment Bank. “Other countries” includes all countries and country groups not shown in the chart, as well as unallocated transactions.

Data for the geographical breakdown of the euro area current account

International investment position

At the end of the first quarter of 2021 the international investment position of the euro area recorded net liabilities of €118 billion vis-à-vis the rest of the world (1.0% of euro area GDP), unchanged from the previous quarter (see Chart 2 and Table 2).

Chart 2Net international investment position of the euro area

(net amounts outstanding at the end of the period as a percentage of four-quarter moving sums of GDP)

Source: ECB.

Data for the net international investment position of the euro area

The overall stability in the international investment position reflected large but offsetting changes in the various investment components. Larger net assets were recorded for direct investment (€1,715 billion, up from €1,568 billion) and for portfolio debt (€884 billion, up from €846 billion), while net liabilities increased in portfolio equity (€2,518 billion, up from €2,493 billion) and other investment (€933 billion, up from €844 billion).

Table 2

International investment position of the euro area

(EUR billions, unless otherwise indicated; amounts outstanding at the end of the period, flows during the period; non-working day and non-seasonally adjusted)

Source: ECB.
Notes: “Equity” comprises equity and investment fund shares. Net financial derivatives are reported under assets. Discrepancies between totals and their components may arise from rounding.

Data for the international investment position of the euro area

The developments in the euro area’s net international investment position in the first quarter of 2021 were driven by positive net flows due to exchange rate changes and transactions, which were fully offset by negative net price changes and other volume changes (see Table 2 and Chart 3).

The increase in net assets for direct investment and portfolio debt was mainly due to positive net flows in transactions and exchange rate changes, which were, in the case of portfolio debt, partly offset by negative net price changes (see Table 2). The increase in net liabilities for other investment was largely driven by transactions, while larger net liabilities for portfolio equity resulted from a combination of negative net price changes, exchange rate changes and other volume changes, which were partly offset by positive transactions.

At the end of the first quarter of 2021 the gross external debt of the euro area amounted to €15.4 trillion (around 136% of euro area GDP), up by €606 billion compared with the previous quarter.

Chart 3

Changes in the net international investment position of the euro area

(EUR billions; flows during the period)

Source: ECB.
Note: “Other volume changes” mainly reflect reclassifications and data enhancements. 

Data for changes in the net international investment position of the euro area

Data revisions

This statistical release incorporates revisions to data for the reference periods between the first quarter of 2017 and the fourth quarter of 2020. The revisions reflect revised national contributions to the euro area aggregates as a result of the incorporation of newly available information affecting mainly the data for direct investment and portfolio investment.

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