Sunday, February 22, 2015

Greece's Current Account: January - December 2014

Below are the figures provided by the Bank of Greece regarding the development of Greece's current account in 2014 relative to the previous year. Also, the last quarter of 2014 is compared to the last quarter of the previous year (in BEUR).


2014 2013
2014 2013
Revenue from abroad

Exports 23,6 22,5
6,1 5,7

Services (e. g. tourism) 31,1 28,0
5,9 5,4

Other income 3,4 3,4
0,8 0,8

Current transfers 6,0 7,7
0,9 1,4

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

Total revenue from abroad 64,1 61,6
13,7 13,3

Expenses abroad

Imports 41,6 39,8
10,5 10,0

Services (e. g. tourism) 11,3 11,0
2,9 2,7

Other expense (e. g. interest) 6,3 6,5
1,5 1,3

Current transfers 3,2 3,2
0,9 0,6

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

Total expenses abroad 62,4 60,5
15,8 14,6

Current account balance 1,7 1,1
-2,1 -1,3

Trade balance -18,0 -17,3
-4,4 -4,3
Services balance 19,8 17,0
3,0 2,7
Other balance -2,9 -3,1
-0,7 -0,5
Current transfer balance 2,8 4,5
0,0 0,8

---- ----
---- ----
Current account balance 1,7 1,1
-2,1 -1,3

1)  The surplus improved by 600 MEUR to 1,7 BEUR (+52%) which is remarkable. The improvement came as a result of foreign revenues' growing faster (+4,0%) than expenses abroad (+3,1%).
2) Towards the end of the year, the development became negative. The previous year had shown a deficit of 1,3 BEUR in the 4th quarter which deficit increased to 2,1 BEUR in the 4th quarter of 2014.
3) The most critical observation is that imports have started to grow again. It will be recalled that Greece's massive current account improvement since 2010 was almost exclusively due to a cut in imports, caused by the compression of domestic demand (exports increased only very moderately). 2014 was clearly a year where the downward trend in the Greeke economy seemed to have stopped. In fact, several statistics indicated that Greeks were gradually returning to spending money.

Conclusion: as Greeks spend more money, imports go up because the domestic economy cannot provide the products and services which Greek consumers desire in a sufficient amount, or not at all. There is no better argument to support structural reforms than this! The Greek economy will only begin to see the light at the end of the tunnel when increased consumer spending stimulates the domestic economy instead of the economies of other countries.


  1. Thank you, very interesting. With reason I am curious about the month of February, 2015. Hope to find the numbers here also as soon it is possible.
    The month of January 2015 is not completely comparable with the months before because a lot was going on already around the elections. The nice numbers are mostly (in my opinion) related with the former Greek government, with Samaras as the PM.
    We know about the losses the new government created and also that what could have been achieved on February 28, has a delay now of four months, in which a lot of new losses can be expected, instead of
    economical growth. Trust comes on foot, and leaves on horseback. (Jeroen Dijsselbloem).

  2. Herr Kastner, I apologize: I see too late that you did not compare 2015 with the year before, but 2014, with 2013.
    So: you may delete the former comment, and this as well.

  3. Classic example of excellent argument spoiled by wrong basic assumptions. The mistake is the implicit assumption that there is an independent Greek economy. There is no such thing anymore. The whole point of the EC and the euro is to create economic specialization, so any increase in Greek economic activity will mean increased imports, as many things must not be produced by Greece. These,in theory, must be compensated by increased exports or increased capital inflows. Of course this is an argument for Greek reform even stronger that the one made by the blog author. However it also implies that it is far more difficult to overcome Greek stagnation, as quick fixes are impossible-increasing exports is by definition time consuming. For example what is the percentage of Austrian GDP that comes from exports? I suspect much higher than the Greek one. If my memory is correct only 8% of the Greek GDP comes from exports, whereas even the other Balkan states have a percentage in the range of 20-30%. The only potential quick fixes are tourism and logistics, mainly through Piraeus. Both were damaged because of the election uncertainty and the liquidity squeeze, something that SYRIZA will almost dertainly come to regret.

  4. Although your last sentence of the conclusion is clearly correct, this does not apply to your statement about structural reforms. I recall from my detailed examination of older import data that there had been a shift of sources from Europe and to cheap-source countries such as China and India. There was also some indication that perhaps cheap imports were substituting for domestic production -- indication of severe economic depression and crisis, since Greeks tend to favour Greek products other than in the case of luxury goods such as German cars.

    Although eurozone membership created the origins of the damage to Greek domestic consumption patterns and new imports made possible with cheap credit and a high exchange rate, this does not pertain after 5 years of austerity. It follows that unless one examines in detail the domestic consumption patterns and their utilisation of cheap versus EU imports, one does not know at all why imports are increasing or decreasing. Moreover, we also need to have a picture of bankruptcies and domestic production capacity in order to develop appropriate policies.

    The generic term "structural reforms" just doesn't cut it, I'm afraid. The repairs needed to the Greek economy require detailed and original investigation -- which the Troika failed to undertake in any way at all. They are responsible now for the disastrous conditions in Greece, yet seem to accept no responsibility at all.

    The task facing Varoufakis and his colleagues is one of Herculean proportions: I fear for their chances of success, given the mess that the Troika has made of Greece.

    1. "The generic term "structural reforms" just doesn't ......" How correct and straight to the heart of the Greek problem. The Greek economy needs very extensive, deep and unusual microeconomic and other socioeconomic reforms. When the troika arrived the IMF guy, Mr Thomsen, described the situation as Alice in Wonderland. My experience (I am MD of the company that absorbed the commercial part of a major Greek olive oil exporter- the Agricultural cooperative of Lesvbos) makes Alice look rational. It will take several pages to desrcibe the mess we are confronting. We are reforming the whole thing bit by bit. Thank God we are not operating under tight time schedules or it would have been impossible. I am not sure the Troika or most EU politicians really understand the extend of the structural problem. However I must say this: without the relentless outside pressure to close Agrotiki Bank there would have been no reform of the Agricultural Cooperatives in Greece and they would have continued in their strange, corrupt and umproductive ways. So the Troika is a necessary but not a sufficient condition for solving the problem. I am not sure that SYRIZA and Finance Minister Varoyfakis know what to do either. What seems to be needed is a period of political peace and stability, under intense troika pressure, lasting say 2-3 years for reforms like the ones we are forcing through at Lesvos to work and establish a new model. Not very efficient I agree.

    2. @ Xenos at 3.51
      I agree with you that the term 'structural reforms' is a nebulous term and can be misinterpreted without limitation. And I also agree that this will be a Herculean effort for Greece. To think that the Troika would focus on those structural reforms which would really help Greece long-term is a bit naive. The Troika was and still is a defender of creditors' interests. Full stop. Anyone who denies that is blowing smoke. On the other hand, the EU Task Force (and possibly also the OEDC) would certainly be the right addresses for working out appropriate structural reforms.

      In a 1993 interview, Varoufakis described the Greek economy in a 'state of terminal decline'. While I thought that that was a printable quotation, I found it totally unacceptable and challenged him to tell me what he would do if he were in power (that was about 2 years ago). His response in writing: "I wouldn't know where to begin'.

      Well, someone will have to figure out where to begin and if Varoufakis can't do it, he has all the powers to employ the right experts to do it. But it needs to be done.

      Personally, I would describe structural reforms in the folowing context: Greece, for years, has ranked as the EU's least attractive place to do business and the EU's most corrupt country. 'Structural reforms' would to me be any measure which makes Greece a more attractive place to do business and a less corrupt country, and all of this with a well-functioning public administration. If you look up the original mission statement of the EU Task Force, that's exactly how they defined their mission then. Have you heard much about Greece's demanding support from the EU Task Force?

      If nothing comes to mind at all, then I think they should dig out the McKinsey Report from 2011. There are plenty of good ideas in that report. Regrettably, that report got about 2 minutes' worth of attention in Greece.

    3. Klaus and Athensdog: I think we are pretty much in agreement on all of these things. The real problems facing Greece are massive, and do seem like Alice in Wonderland (and always did, even in the 1980s). The only thing I can say which is more positive, is that increasingly the UK and other northern economies are also starting to resemble an Alice in Wonderland -- even to the extent that identical economic problems to those of Greece are now appearing.

  5. When we visited Greece last spring by Camping car we had to buy food for almost every day and I was surprised to see that an important part of it was imported. This was not only at Carrefour and Lidl, but also in small shops in small villages.

    I can understand that cans with peeled tomatoes in Switzerland are imported from Italy because the climate in Switzerland is not warm enough.

    But why ever are those cans in Greece imported??
    I also remember that Klaus had reported about tooth paste from South America.


    1. It is an indication of a very serious problem, and is the sort of thing that I allude to in my post above.

      A theoretical explanation would be that the domestic supply of tinned tomatoes has been consumed, that replenishment of stocks has not occurred either through lost agricultural production (bankruptcies or poor harvest) or exports to countries with higher prices.

      However, during the 2000s Greece started to import all manner of fruit and vegetables that were previously domestically produced and consumed, largely because the high euro rate (relative to the Greek economy) squeezed out domestic production with cheaper imports. This is a well-known and expected economic phenomenon, when weaker economies are included in a monetary union.

    2. @Xenos:

      If Greek production of vegetables and fruits is too expensive compared to imports from EU, this is the very best proof that wages are too high and production methods too archaic.

      I have seen on my trip huge areas of territories perfectly suitable for agricultural production - abandoned! (Not even photovoltaic installations, they prefer to produce electricity by burning imported fuel.)

      I think that at the origin there are similar roots to the problem: Greeks do not like to work in restaurants, agriculture etc. etc. - it is easier to be unemployed....


    3. @Herr Trickler. Greek agricultural production was always (on average) less efficient than some other EU countries -- partly through the prevalence of smallholdings and limited access to capital and partly through the nature of the land in many regions of Greece. Nevertheless, the quality of Greek production was (in my own experience, too) unrivalled across Europe. I have never eaten such quality of fruits and vegetables as I experienced prior to eurozone membership.

      The problem was basically caused by monetary union, and price but not quality competition. This was the mistake of Greek elites -- greedy for riches, and acceptance into the big boys' club. It is not the fault of ordinary Greek workers -- regardless of German propaganda -- other than in a rather loose structural sense, of the cultural context and structure of employment relations.

      The choice of unemployment before work is not correct: again, this is German propaganda. All Greeks that I knew in Athens prior to my leaving Greece last year were desperate for any sort of work, to save their families from starvation and to pay their rent or property tax. if there are unused tracts of land, this reflects the failure of the Troika's absurd policies of deregulation alongside austerity. No country can restructure while its economy is collapsing and its people starving.

      This latter point will confront varoufakis, who will be faced with the choice of feeding and housing people with any budget surplus, or investing in future economic development. That choice should not be forced onto the government, but that is the German intention.

    4. @ Xenos at 1.50
      Total agreement on the quality. When in Greece, we live primarily on vegetables, salads, etc. I look at the prices at the laiki and they are give-away's in terms of Austrian prices. When in Austria, I see prices where one can only conclude that Greeks would make tremendous margins. And yet - the produce comes from all sorts of European countries and quite a bit from other continents but virtually nothing from Greece. And I ask --- WHY??? Why can I not have a Greek salad in Austria??? Only a little over 1.000 Km away from Northern Greece???

    5. @Klaus: the one thing that Greeks are severely lacking, more even than capital, is organisational skills. I have tried over two decades to make changes to university and research approaches, and every change was rejected. Only in a personal context was I able to achieve anything. To some extent, this is the Germanic rigidity that Greeks adopted with Germanic law and rules in the 1830s: it is a disaster. Combine that with oriental chaos...That is the reason you cannot have Greek salads in Austria!

  6. Excellent work, Mr. Kastner! Cold hard facts, explained in light of the developments, and convincing logical conclusions. This should put many journalists to shame (for instance that clueless loudmouth Münchau). Thank you!

  7. All above are myths...

    You've heard the Greek crisis myths, now here are some truths - See more at:


    1. There is nothing in the macropolis article that contradicts Klaus's article or any of our comments above, unless you are referring to policy implications. This is the main issue that I commented on -- that the Troika reforms are worse than useless.

  8. Dear Mr.Kastner,

    Sorry but i can not agree with the overall conclusions made just by numbers. This especially, in the periods that you stated. Not that i do not believe reforms in public and private sector must come and are coming slowly, but your conclusion is strictly based on figures which mean nothing if you do not ave the data behind them....

    What is Greece Importing specifically? Unfortunately there is no detailed data after 2012. (if you have a source wich depicts details please point it to me.) What i found was up to 2012. The number one item we imported was Crude petroleum 25%. The number one item we exported was reifined petroleum. The next imports of the same year were refined petroleum (7%), then medical products (5%), then ships passenger and cargo (4%) and everything elseis below (1%).

    In the last years shipping owners have been purchasing new cargo ships. Bigger and faster as the shipping business on a global scale is in the toilet since 2008. Greek ship owners are very smart and during the boom period where selling off their ships. When the crash came they started to buy and have continously increased their fleets since then. So when 5% in the last 5 years ship owners are are buying cargo ships, on the books invoiced to greek home based companies, it is recorded as an import right? Right. Do these ships export? No they are service vessels which do nothing for greece. They are servicing all countries transferable goods. So we have an "item" which has been imported and has no contribuation in exports. that is just 5%.

    I can also build more logical explinations for each category which brings skeptisim to your conclusion.

    Also on the list I saw many items at the 1%, at least 5 or 6 which are items of imports which can be and mostly are relative to infrastucture. It means Greece is importing things to build things and infrastrucre. These imports can be seen on the books as imports or investments by businessmen for future exports or increased efficiency. Investments are in lump sums recorded in the specific year even though a machine purchase will contribute to "exporting" for years to come. In 2012,13,14 i have 3 suppliers ave invested in equipment yr/yr roughly 3-5 mil euro each. We did about 1 million per yearand a big investement coming this year and 2015 2016. Many people are buying equpiment. I even have a fellow villager who sells his cheese to supermarkets. He built asmall factory and equipment. 1 million investment.


  9. continued...

    For the Petroleum which is 25%. Back then. The price of crude was averaging at 120usd per barrel. Only since end 2013 it dropped and then slump now but refineries do not spot purchase but purchase by agreement. So if in 2013 a reifnery has pruchased crude at 100usd lets say and is selling refined products with a lesser margin as to maintain export customers (but main customer is the greekmarket) it is quite easily this category alone can effect the whole import and exports ratio.

    As for cars in 2012 it was 1%or less than. Yes ok we have to buy vehicles. Especially since there was a program running from 2011 to 2013 which you return your old car and replaced by a new one with better emmisions. So i am sure cars in 2014 will drop significantly. The emmissions thing another slap on Greece to getour emmisions under control. I believe emmsions have improved greatlyduring this period. Thesaloniki excluded until they get the damn metro finished.

    Personal note. Where i work the last 5 years we have gone from a 40%/60% exports/internal market sales, to 65%/35% exports/internal market share. As we are now cheap labour during the same time period we reduced prices to be competive. Growth has come but the bottom line (u know what i mean) grows slowly. meanwile in greece the products sold are still not as cheap as they should be as we need to have GPM from somewhere.

    Refined petrol products is mainly plastics. In the period you mention the plastics prices where the highest ever. Now they have disapated. Plastics are for packaging of finished goods which service companies likemine. Te more we export the more they import raw materials. Another example of the cause of 2-3 categories of imports that can change how the total import/exports looks like.

    My overall point is without year on year data of what was imported exported in the last 5 years, then the 10 numbers you show above are only numbers. Only indications.

    Here I agree with my compatriots that behind numbers are people.



  10. Mr. Kastner,

    I would like to also add to the above overall point. Not only one must review the detailed data of what was imported and exported year on year, but also the same thing in value and in quantity. It is quite vital because if an apple farm exporter exported 1 ton of apples at 2 euro a kilo in 2013 and the next year 2 tons at 0,50 the exports as a value remains the same. Such a change do occur. Meanwhile, he probably had to import more on the same year in fertilizers.



  11. I appreciate all the commenta which are certainly valid and illuminating. I am not in a position to make detailed analyses because I don't have the detailed informaton. I only comment on the numbers. I would like to point out, though, that we are not in a barter economy. Greece cannot pay for its imports with apples. The number of apples exported is interesting from an analytical point of view but what matters for the current account balance are the Euros which one gets for the exported apples.

  12. Hi Mr. Kastner,

    I am misunderstood i think. Your point euro on euro is correct. Imports versus exports. My point is that we do not know what we imported. If it is heavy machinery for factories and infrastucture, than that is all good as it is for a long term ROI of the competitiveness for the Greek products as to be exported. Wasn't it noted by our European partners back 4-5 years ago "when greeks start investing in their own country, "we" the business men of europe/world will also come."

    I was also thinking this morning driving to work and the imports of cars. Yes we have a 1% on imports of cars. Maybe the market also helped us change. Both for emissions and secondly for more efficiency. As of the last 2 years there is a huge boom in cars with new tech diesel. In a sense this is also a "good" investment for businesses and families. More effcient cars more money to pay to taxes. If there are few ferraris and BMW X6's in there it bumps up the total revenue on imports. On the most part though if you see the vehicles on the road they are mostly toyota/opel. which are also diesel and i live in northern athens which supposedly is the upper end of athens.

    I get very frustrated Mr. Kastner. I really do, I am a hopeful and positive person and i see my compatriates changing efficiencies in every aspect of their lives in the meantime there is a social outcry regardless of what we do. Then you hear all europeans stating that we are lazy. I also do not believe that the majority of greek observers, aside from your self and "Xenos" know what Greece was and what it has become. What Pasok and ND did not do for 30 years has been done in 5 and meanwhile doing within a economical crisis.



    1. Yes, I support this comment about the nature of imports. That was implicit in my earlier comment about the need for detailed and original investigation. If imported goods are actually intended for capital goods (e.g. factory machinery, or even some smaller items relevant for small company production units) this is very different from consumption goods. The crude data that everyone seems to be working with do not identify this.

      Even with consumption goods one needs to know exactly what they are and the relation that they have with both production and consumption in Greece. Again, raw data are unlikely to yield more than crude guesses.

      You see, if the Troika had sent a team of experts to work with the Greek authorities to look at these issues, then I would be more positive. But from what I saw, the Troika tried to impose the diktat of Germany and the last government tried to impede implementation in every way. Neither of them was right, because neither of them had the intention of promoting the economic development of Greece.

      It is my fervent hope that SYRIZA will not go the way of ND and PASOK administration, and feather their own nest at the expense of the Greek people. All the evidence so far suggests that they are something different.