The seasonally adjusted current account of the euro area recorded a deficit of EUR 3.8 billion in July 2010. This reflected deficits in current transfers (EUR 8.0 billion) and income (EUR 1.4 billion), which were partly offset by surpluses in goods (EUR 3.4 billion) and services (EUR 2.2 billion).
The 12-month cumulated seasonally adjusted current account recorded a deficit of EUR 49.8 billion in July 2010 (around 0.6% of euro area GDP), compared with a deficit of EUR 130.4 billion a year earlier. The reduction in the current account deficit was predominantly due to a decrease in the income deficit (from EUR 68.4 billion to EUR 31.3 billion) and to an increase in the goods surplus (from EUR 4.2 billion to EUR 38.5 billion), as well as, to a lesser extent, an increase in the surplus in services (from EUR 29.6 billion to EUR 35.6 billion) and a decrease in the deficit in current transfers (from EUR 95.9 billion to EUR 92.5 billion).
Financial account
In the financial account, combined direct and portfolio investment recorded net outflows of EUR 26 billion in July 2010, showing net outflows in both portfolio investment (EUR 24 billion) and direct investment (EUR 2 billion).
The net outflows in direct investment resulted from net outflows in equity capital and reinvested earnings as well as in other capital (mostly inter-company loans) (both EUR 1 billion).
Portfolio investment recorded net outflows in debt instruments (EUR 26 billion) which resulted mainly from gross sales of euro area bonds and notes by non-residents and gross purchases of foreign money market instruments by euro area residents.
The financial derivatives account was close to balance.
Other investment recorded net inflows of EUR 19 billion, mainly reflecting net inflows in MFIs (excluding the Eurosystem).
The Eurosystem’s stock of reserve assets decreased from EUR 583 billion to EUR 536 billion in July 2010, mainly owing to a decrease in the market price of gold. Transactions (excluding valuation effects) contributed to an increase of EUR 3 billion in the overall position.
In the 12-month period to July 2010, combined direct and portfolio investment recorded cumulated net inflows of EUR 170 billion, compared with net inflows of EUR 243 billion in the preceding 12-month period. This decrease was the result of lower net inflows in portfolio investment (down from EUR 405 billion to EUR 261 billion), which were partly offset by lower net outflows in direct investment (down from EUR 162 billion to EUR 90 billion). The decrease in net inflows in portfolio investment was due mainly to lower net inflows in money market instruments (down from EUR 289 billion to EUR 111 billion).
