Greece's Current Account 2009 - 2013

Per August, the Bank of Greece reported a year-to-date current account surplus of 1,6 BEUR. To really appreciate this number in the historical context, I present below the trend over the last 5 years. Regrettably, there was not enough room for the year 2008, which was historically the 'worst' year in Greece's current account. Had I been able to include it, the trend would have been so much more obvious.

(in BEUR)

		January - August
		2009	2010	2011	2012	2013
Revenue from abroad
	Exports	10,0	10,7	13,2	14,2	15,1
	Services (e. g. tourism)	18,6	19,6	19,5	19,3	19,0
	Other income	3,0	2,7	2,1	2,6	2,4
	Current transfers	4,3	3,9	3,6	4,3	6,2
		----	----	----	----	----
	Total revenue from abroad	35,9	36,9	38,4	40,4	42,7
Expenses abroad
	Imports	30,6	30,7	32,1	28,5	26,5
	Services (e. g. tourism)	9,4	10,2	9,6	8,5	7,4
	Other expense (e. g. interest)	9,2	7,9	7,6	4,4	4,8
	Current transfers	2,8	3,0	2,7	2,7	2,4
		----	----	----	----	----
	Total expenses abroad	52,0	51,8	52,0	44,1	41,1
Net foreign deficit (current account)		-16,1	-14,9	-13,6	-3,7	1,6

The current account went from minus 16,1 BEUR in 2009 (in 2008 it was even 21,8 BEUR!) to plus 1,6 BEUR during the first 8 months of the year. In case somebody doesn't get the message, that's a turn-around of 17,7 BEUR! Below are a few observations.

1. The turn-around is composed of 6,8 BEUR on the improved revenue side and 10,9 BEUR in the reduced expense side. That's actually quite a positive trend because, until not too long ago, the improvement in the current account had come almost exclusively on the expense side.
2. On the revenue side, it's mostly increased exports which accounted for the improvement. However, note the export improvement has come only in the last 3 years. Could that mean that Greece's export structure is indeed improving but it only took a while until the results showed up? Also, in 2008, exports were 13,2 BEUR, so relative to that years the increase was much lower. When considering that the Euro devalued against third currencies about 20% during this time (i. e. Greek products became cheaper against third currencies) and Greek labor costs declined substantially during this time (i. e. 'more competitive'), one would thing that there should be quite a bit more of export potential as the Greek domestic productive capacity adapts to new opportunities.
3. What is surprising on the revenue side is that services remained kind of flat. Tourism is included in services and tourism should have had greater potential during this time.
4. On the expense side, reduced imports do not appear quite as important as one would expect from published news that Greek demand was 'killed' during the time. There should be quite a lot of potential to reduce imports and substitute them with domestic production.
5. Quite noticeable is the decline in services. Again, tourism is included here and Greeks apparently reduced their offshore tourism.
6. Finally, other expense has come down significantly. Interest expense is included here and this would suggest that the various restructurings of Greece's debt (PSI; lower rates) DID have a positive effect. After all, interest expense almost haved whereas debt increased during the period.