The working day and seasonally adjusted current account of the euro area recorded a surplus of EUR 1.3 billion in October 2007 (corresponding to a surplus of EUR 2.0 billion in non-seasonally adjusted terms). This reflected surpluses in goods (EUR 7.6 billion), services (EUR 2.2 billion) and income (EUR 1.6 billion), which were offset almost in full by a deficit in current transfers (EUR 10.1 billion).
The 12-month cumulated, working day-adjusted current account up to October 2007 recorded a surplus of EUR 29.5 billion (about 0.3% of euro area GDP), compared with a deficit of EUR 22.8 billion a year earlier. This shift resulted mainly from increases in the surpluses in goods (from EUR 13.3 billion to EUR 68.3 billion) and services (from EUR 34.9 billion to EUR 43.4 billion), which were partly counterbalanced by a shift in the income account from a surplus (EUR 7.9 billion) to a deficit (EUR 3.8 billion).
Financial account
In the financial account, combined direct and portfolio investment recorded net outflows of EUR 33 billion in October 2007, as net outflows in portfolio investment (EUR 54 billion) exceeded net inflows in direct investment (EUR 21 billion). These developments were influenced by a large take-over involving both euro area and non-euro area financial institutions.
The net inflows in direct investment resulted from net inflows both in equity capital and reinvested earnings (EUR 6 billion) and in other capital, mostly inter-company loans (EUR 15 billion).
The portfolio investment account recorded net outflows in both equity (EUR 6 billion) and debt instruments (EUR 48 billion). The net outflows in debt instruments predominantly reflected net purchases of foreign debt securities by euro area residents (EUR 58 billion).
Other investment recorded net outflows of EUR 38 billion, mainly as a result of net outflows in other sectors (EUR 35 billion).
Reserve assets increased by EUR 1 billion (excluding valuation effects). At the end of October 2007 the stock of the Eurosystem’s reserve assets stood at EUR 347 billion.
In the 12-month period to October 2007, combined direct and portfolio investment showed cumulated net inflows of EUR 194 billion, compared with net inflows of EUR 27 billion a year earlier. This increase mainly reflected higher net inflows in portfolio investment (from EUR 153 billion to EUR 325 billion). The developments in portfolio investment were largely related to lower net purchases of foreign equity by euro area residents (from EUR 187 billion to EUR 49 billion) and higher net purchases of euro area debt instruments by non-residents (from EUR 370 billion to EUR 484 billion).
