Monday, October 22, 2012

Greece's current account balance per August 2012

The current account deficit from January-August 2012 was 4,6 BEUR. To really appreciate this figure, I put it below in comparison to the same period of 2008. Why 2008? Because 2008 was about the worst year from the standpoint of a current account that one could imagine a country to have (annual deficit of 35 BEUR!). In short, compared to 2008, the current account deficit so far this year has declined by 79%! And the month of August was the second consecutive month with a surplus, even a surplus as high as 1,6 BEUR for the month. Below are the details.


January - August

2008 2012
2011 2012
Revenue from abroad

Exports 13,2 14,2
1,8 1,9

Services (e. g. tourism) 23,9 19,0
4,0 4,0

Other income 3,7 2,2
0,3 0,3

Current transfers 5,1 4,0
0,1 0,5

---- ----
---- ----

Total revenue from abroad 45,9 39,4
6,2 6,7

Expenses abroad

Imports 43,3 28,5
4,0 3,4

Services (e. g. tourism) 11,2 8,5
1,2 1,0

Other expense (e. g. interest) 10,7 4,3
0,9 0,4

Current transfers 2,5 2,7
0,2 0,3

---- ----
---- ----

Total expenses abroad 67,7 44,0
6,3 5,1

Net foreign deficit (current account) -21,8 -4,6
-0,1 1,6

On the revenue side, the most important observation is that revenues from services were almost 5 BEUR lower in 2012 than in 2008. That category is largely comprised of revenues from tourism. That is something which would need to be researched in detail because, with its importance for Greece, if tourism ever got into trouble, that would really spell trouble for Greece (please note that if Greece had had the same revenues from services in 2012 as in 2008, the current account 2012 would have been in surplus for year-to-date).

On the expense side, service expenses are also significantly lower which could indicate that Greece might have foreigners spending less money in Greece but, at least, Greeks are also spending less money on tourism abroad.

Very significiant is the 10,4 BEUR decline in other expenses. Presumably, much of that is due to lower interest expense reflecting the lower interest rates after the rescheduling of earlier this year as well as the impact of the PSI.

On the trade balance, exports were 7% higher in 2012 than in 2008. That is not really cause for jubilation. Considering that the Euro traded much lower against third currencies than in 2008 and considering that, after 2 years of cost-cutting, Greece has already become quite a bit more competitive, one could have expected exports to rise significantly more.

The real bombshell is imports which were 34% lower in 2012 than in 2008. That translated into approximately 15 BEUR of less spending abroad. Congratulations! At the same time, it is clear that with contracting demand, spending on products not only delinces domestically but also internationally. This is why Greece should use the time of depression to increase domestic production capabilities so that future demand can be more sourced domestically.

The figures for August 2012 are commented by the Bank of Greece in this press release. In essence, there has been improvement in most categories relative to the previous year. Again, one soft point is revenues from tourism. This only underlines the need to look into this issue in further detail.


  1. On the Tourism side it would be interesting to compare the first 6/7 months of the year with the first 6/7 months of 2008 and 2011. The significant point is that Tourism was hit hard in the first 6/7 months of the year owing to the detrimental effect of the uncertainty & instability associated with the elections.No one knew if we were going to stay in the EZ etc.

    1. If you tell me exactly which periods you want to see compared, I will compare them (from the above, I am not quite sure which periods you mean).

  2. What I mean is if we can have the revenue services figure for the first 6 months of the calendar year i.e Jan+Feb+... including June & July for the three years 2008, 2011, 2012. This way we can understand whether the fall in tourist arrivals was concentrated in the first seven months of the year. If this is proven then the fall is explained by the election uncertainty in Greece and this should not reoccur in 2013 barring another such event.

    1. Jan-Jul Receipts from "travel"

      2008: 5,9 BEUR
      2011: 5,3 BEUR
      2012: 5,0 BEUR

  3. Based on these figures there does not appear to be a significant reduction in tourist receipts in 2012 versus 2008 or 2011.This 5 bn reduction must somehow be explained otherwise.Thank you for your insightful input.

    1. By far the biggest item in "services" is "transportation" and that declined markedly. I am not sure what this is. Presumeably, it also has something to do with travel/tourism.

  4. Not sure, but I think the transportation receipts are mainly from shipping.

    1. Shipping is separate category and counts as part of "trade".

    2. I believe shipping contributes both to the trade and service balances. Buying and selling of ships is part of the trade balance, whereas transport receipts are part of the service balance.

      The press release above from Bank of Greece says "In the same period, gross transport receipts (chiefly from merchant shipping) decreased (by 1.7%)".