Greek current account deficit drops in January-October 2021 thanks to travel services

In the January-October 2021 period, the current account deficit recorded a decrease of 2.7 billion euros year-on-year and stood at 6.4 billion euros, according to the Bank of Greece.
The hike in the services surplus is primarily due to an improvement in the travel services balance, the bank said. However, this was partly offset by a decline in the surplus of the transport balance. Non-residents’ arrivals grew by 93.8 pct and relevant receipts by 142.0 pct year-on-year, accounting for 46 pct and 58 pct of the respective levels in 2019. Net transport receipts dropped by 9.7 pct.

According to the bank's press statement, in October 2021, the current account deficit increased year-on-year, due to a deterioration in the balance of goods and the primary and secondary income accounts, which was partly offset by an improvement in the balance of services.
In January-October 2021, the current account deficit dropped year-on-year, due to an increase in the services surplus and an improvement in the primary and secondary income accounts, which were partly offset by a deterioration in the balance of goods.

Current account
In October 2021, the current account deficit widened by €45 million year-on-year and stood at €781 million.

A rise in the deficit of the balance of goods is accounted for by a larger increase in imports than in exports. Exports increased by 44.6% and 6.9% at current and constant prices, respectively, while imports rose by 50.2% and 12.2% at current and constant prices, respectively. In particular, non-oil exports of goods grew by 25.4% and 15.3% at current and constant prices, respectively, and non-oil imports of goods increased by 28.5% and 21.7% at current and constant prices, respectively.

The surplus of the services balance more than doubled, reflecting an improvement in mainly the travel balance and, to a lesser extent, in the transport and other services balance. Non-residents’ arrivals and the corresponding receipts rose substantially (by 124.5% and 159.8%, respectively). In particular, receipts and arrivals stood at 98.4% and 77.3%, respectively, of the October 2019 levels. The surplus of the transport balance grew mainly on the back of an improvement in the surplus of the sea transport balance.

The income account deficit rose year-on-year, due to higher net interest, dividend, and profit payments. The secondary income account deficit increased year-on-year, as a result of higher general government payments.

In the January-October 2021 period, the current account deficit recorded a decrease of €2.7 billion year-on-year and stood at €6.4 billion.

A rise in the deficit of the balance of goods is due to the fact that imports increased more than exports in absolute terms. In more detail, exports grew by 34.0% and 13.5% at current and constant prices, respectively, while imports rose by 32.1% at current prices and by 10.9% at constant prices, respectively. Specifically, non-oil exports and imports of goods grew at almost the same rate (25.7% and 25.6%, respectively) at current prices, while at constant prices they increased by 20.0% and 23.0%, respectively.

A rise in the services surplus is primarily due to an improvement in the travel services balance; however, this was partly offset by a decline in the surplus of the transport balance. Non-residents’ arrivals grew by 93.8% and relevant receipts by 142.0% year-on-year, accounting for 46% and 58% of the respective levels in 2019. Net transport receipts dropped by 9.7%.

The primary income account turned from deficit to surplus year-on-year, mainly owing to lower net interest, dividend, and profit payments, while the surplus of the secondary income account rose due to an increase in general government net receipts.

Capital account
In October 2021, the capital account registered a deficit, compared with a surplus in October 2020, and stood at €104 million. In January-October 2021, the capital account surplus rose by €1.3 billion year-on-year and stood at €3.1 billion.

Combined current and capital account
In October 2021, the deficit of the combined current and capital account (corresponding to the economy’s external financing requirements) increased against October 2020 and stood at €884 million. In the January-October 2021 period, the deficit of the combined current and capital account decreased year on year, from €7.3 billion to €3.3 billion.

Financial account
In October 2021, under direct investment, residents’ external assets increased by €24 million and residents’ external liabilities rose by €224 million, including the conclusion of the acquisition of an additional 16% stake in Piraeus Port Authority S.A. by COSCO SHIPPING (Hong Kong) Co., Limited.

Under portfolio investment, a decrease in residents’ external assets is attributable to a drop of €268 million in residents’ holdings of foreign bonds and Treasury bills, which was partly offset by a rise of €207 million in their holdings of foreign equities. A decrease in residents’ external liabilities is due to a drop of €221 million in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investments, a rise in residents’ external assets mainly reflects a statistical adjustment of €446 million associated with the issuance of banknotes and an increase of €307 million in residents’ deposits and repo holdings abroad. An increase in their liabilities represents a rise of €1.6 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included).

In the January-October 2021 period, under direct investment, residents’ external assets increased by €860 million and residents’ external liabilities, which represent non-residents’ direct investment in Greece, rose by €4.0 billion.

Under portfolio investment, an increase in residents’ external assets is mainly attributable to a rise of €16.2 billion in residents’ holdings of foreign bonds and Treasury bills and a rise of €1.7 billion in their holdings of foreign equities. An increase in residents’ external liabilities is due to a rise of €2.7 billion in non-residents’ holdings of Greek government bonds and Treasury bills and of €1.3 billion in non-residents’ holdings of shares of Greek firms.

Under other investments, residents’ increased external assets reflect a rise of €2.5 billion in loans extended to non-residents and a €3 billion statistical adjustment related to the issuance of euro banknotes, which were partly offset by €1.3 billion decreases in residents’ deposit and repo holdings abroad. An increase in their liabilities represents mainly a rise of €12.2 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included).

At the end-October 2021, Greece’s reserve assets stood at €12.3 billion. 

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