The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 7.3 billion in May 2008 (corresponding to a deficit of EUR 21.4 billion in non-adjusted terms). This reflected deficits in current transfers (EUR 5.9 billion) and goods (EUR 3.3 billion), which were partly offset by a surplus in services (EUR 2.7 billion). The income account was close to balance.
The 12-month cumulated, working day-adjusted current account up to May 2008 recorded a deficit of EUR 5.8 billion, compared with a surplus of EUR 13.0 billion a year earlier. This shift was due mainly to an increase in the deficit in current transfers (from EUR 79.8 billion to EUR 93.1 billion) and decreases in the surpluses in goods (from EUR 43.1 billion to EUR 35.4 billion) and income (from EUR 5.6 billion to close to balance). Conversely, the services surplus increased from EUR 44.1 billion to EUR 51.5 billion.
Financial account
In the financial account, combined direct and portfolio investment recorded net inflows of EUR 13 billion in May 2008, reflecting net inflows in portfolio investment (EUR 23 billion) and net outflows in direct investment (EUR 10 billion).
The net outflows in direct investment resulted from net outflows both in equity capital and reinvested earnings (EUR 7 billion) and in other capital, mostly inter-company loans (EUR 3 billion).
Portfolio investment recorded net inflows both in equity (EUR 7 billion) and in debt instruments (EUR 16 billion). The net inflows in debt instruments reflected net inflows in bonds and notes (EUR 37 billion), which were partly offset by net outflows in money market instruments (EUR 21 billion).
Financial derivatives recorded net outflows of EUR 30 billion.
Other investment showed net inflows of EUR 59 billion, mainly as a result of net inflows in the Eurosystem (EUR 20 billion) and in MFIs excluding the Eurosystem (EUR 36 billion).
Reserve assets decreased by EUR 3 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 349 billion at the end of May 2008.
In the 12-month period to May 2008 combined direct and portfolio investment showed cumulated net outflows of EUR 42 billion, compared with net inflows of EUR 208 billion a year earlier. This shift largely resulted from a decline in net inflows in portfolio investment (from EUR 366 billion to EUR 168 billion), which in turn mainly reflected lower net purchases of euro area securities by non-resident investors.
