The working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 7.3 billion in December 2008 (corresponding to a surplus of EUR 1.4 billion in non-adjusted terms). This reflected deficits in current transfers (EUR 7.6 billion), income (EUR 2.2 billion) and goods (EUR 1.2 billion), which were partly offset by a surplus in services (EUR 3.7 billion).
According to the preliminary results for 2008 as a whole, the working day-adjusted current account recorded a deficit of EUR 63.2 billion (about 0.7% of euro area GDP), compared with a surplus of EUR 36.3 billion in 2007. This change was due to shifts in the goods and income accounts from surpluses (EUR 56.6 billion and EUR 11.0 billion, respectively) to deficits (EUR 0.6 billion and EUR 18.2 billion, respectively), an increase of the deficit in current transfers (from EUR 84.6 billion to EUR 94.9 billion), and a decrease of the surplus in services (from EUR 53.2 billion to EUR 50.6 billion).
Financial account
In the financial account, combined direct and portfolio investment showed net inflows of EUR 1 billion in December 2008, owing to net inflows in portfolio investment (EUR 18 billion) that were almost compensated for by net outflows in direct investment (EUR 17 billion).
The net outflows in direct investment resulted from net outflows in both other capital (mostly inter-company loans) (EUR 13 billion) and equity capital and reinvested earnings (EUR 3 billion).
Portfolio investment recorded net inflows in equity (EUR 25 billion) and in money market instruments (EUR 2 billion) that were only partially offset by net outflows in bonds and notes (EUR 10 billion).
Financial derivatives recorded net inflows of EUR 1 billion.
Other investment was balanced, as a result of net inflows into the Eurosystem (EUR 13 billion) and general government (EUR 7 billion) that were counterbalanced by net outflows for MFIs (excluding the Eurosystem) (EUR 20 billion). The net inflows into the Eurosystem were mainly related to the reciprocal currency arrangements (swap lines) between the European Central Bank (ECB) and central banks outside the euro area.
Reserve assets decreased by EUR 8 billion (excluding valuation effects). The stock of the Eurosystem’s reserve assets stood at EUR 384 billion at the end of December 2008.
In 2008 as a whole, combined direct and portfolio investment showed cumulated net inflows of EUR 128 billion, compared with net inflows of EUR 47 billion in 2007. This increase mainly resulted from a rise in net inflows in portfolio investment (from EUR 138 billion to EUR 412 billion), which largely reflected lower net purchases of foreign debt instruments by euro area residents. The increase in net inflows in portfolio investment was to a certain extent offset by higher net outflows in direct investment (up from EUR 90 billion to EUR 284 billion), mainly reflecting lower net foreign investment in the euro area in equity capital and reinvested earnings (down from EUR 251 billion to EUR 53 billion).
