Greek travel receipts drop 9.2% in August despite foreign arrivals rise by 1.8%

Bank of Greece announced that in August 2016, the current account showed a surplus of €1.8 billion, down by €379 million year-on-year. This development is attributable to a decline in the surplus of the services balance and to the deterioration in the primary and the secondary income accounts.

The deficit of the balance of goods declined year-on-year, owing to the significant improvement in the oil balance and to the rise in non-oil exports. The latter was offset by the increase in non-oil imports. It should be noted that, at constant prices, total exports of goods increased by 7.8% and non-oil exports by 8.0%.

The surplus of the services balance narrowed by €245 million, as a result of lower net travel receipts. More specifically, travel receipts fell by 9.2%, in spite of a 1.8% rise in non-residents’ arrivals. By contrast, net transport receipts increased year-on-year, due to an improvement in the air transport balance, while the surplus of the sea transport balance declined to €299 million, from €327 million in August 2015. Net other services receipts improved as well.

Balance of goods and services 

As a result of the above developments, the overall balance of goods and services showed a surplus of €2.2 billion, down by €236 million year-on-year.

In August 2016, the primary and the secondary income accounts showed higher deficits year-on-year. The deterioration in the primary income account is mainly attributable to higher net interest, dividend and profit payments, while the worsening of the secondary income account was principally a result of developments in the general government sub account.

In the January-August 2016 period, the current account showed a surplus of €430 million, down by €560 million year-on-year. More specifically, the primary and the secondary income accounts improved, while the balance of goods and services deteriorated.

The balance of goods showed an amelioration of €663 million, which reflects the improved oil balance and reduced net payments for purchases of ships, whereas the deficit of the balance of goods excluding oil and ships grew, chiefly on account of an increase in imports. It should be noted that, at constant prices, total exports of goods rose by 6%, reflecting mainly a rise in the volume of oil exports, while non-oil exports also grew by 1.4%.

The surplus of the services balance dropped by €1.9 billion year-on-year, due to a significant decline in net transport receipts, which is largely attributable to capital controls. Net travel receipts also recorded a fall. Total non-residents' arrivals increased by 1.3%, while the corresponding receipts declined by 7.1%. These developments were offset to a small extent by an improvement in the other services balance.

In the January-August 2016 period, the primary income account showed a surplus of €467 million, up by €373 million year-on-year. The secondary income account also improved.

Capital account

In August 2016, the capital account showed a small deficit, against a surplus in the same month of 2015, while in the January-August 2016 period it showed a surplus of €638 million, up by €24 million year-on-year.

Combined current and capital account

In August 2016, the combined current and capital account (corresponding to the economy's external financing requirements) showed a surplus of €1.8 billion, down by €389 million year-on-year. In the January-August 2016 period, a surplus of €1.1 billion was recorded, down by €537 million year-on-year.

Financial account

In August 2016, under direct investment, residents' external assets rose by €99 million. Residents' external liabilities (non-residents' direct investment in Greece) recorded an increase of €480 million. The most important transactions concern: (a) an inflow of €280 million from the acquisition of the Piraeus Port Authority (OLP) by COSCO GROUP (Hong Kong); and (b) an inflow of €90 million from the sale to ERGO International (Germany) of the 100% stake of Piraeus Bank in ATE Insurance.

Portfolio investment showed an increase of €426 million in residents' external assets, mainly as a result of a rise of €607 million in residents' holdings of foreign bonds and Treasury bills. This development was partly offset by a decrease of €139 million in residents' investment in foreign equities. An increase of €276 million in liabilities reflects mainly a rise in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a decrease of €695 million in residents’ assets mainly reflects the statistical adjustment related with the issuance of banknotes. A €2.4 billion fall in liabilities reflects a drop of €1.5 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included) and a decline of €905 million, owing to the statistical adjustment related to the issuance of banknotes.

In the January-August 2016 period, residents' assets from direct investment abroad declined by €923 million, while the corresponding liabilities, which represent non-residents' direct investment in Greece, increased by €1.4 billion, compared with a rise of €684 million in the same period of 2015.

Under portfolio investment, residents' external assets registered an increase of €5.6 billion, which is mainly attributable to a rise of €7.1 billion in residents' holdings of foreign bonds and Treasury bills, that was partly offset by a decrease of €1.7 billion in residents' investment in foreign equities. Residents' external liabilities fell by €2.1 billion, mainly on account of a decline in non-residents' holdings of Greek government bonds and Treasury bills.

Under other investment, a decline of €9.5 billion in residents' external assets largely reflects a decrease of €6.5 billion in resident credit institutions' and institutional investors' deposit and repo holdings abroad, and the statistical adjustment related to the issuance of banknotes.(1) On the liabilities side, a drop of €4.5 billion was recorded, which is attributable both to a decrease in non-residents’ deposit and repo holdings in Greece (the TARGET account included) and to the effect of the statistical adjustment. These developments were partly offset by an increase in the outstanding debt of the public and the private sector to non-residents.

At end-August 2016, Greece’s reserve assets stood at €6.8 billion, compared with €5.0 billion at end-August 2015.

Note: Balance of payment statistics for September 2016 will be released on 21 November 2016.

(1) In the January-August 2016 period, both assets and liabilities registered a decrease on account of the statistical adjustment related to the issuance of banknotes, which came to €2.8 billion and €3.2 billion respectively.

Related link: Balance of payments - August 2016 - Table

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