Tuesday, May 26, 2015

Greece: Current Account Development January-March 2015

There are some worrying signals in the latest Balance of Payments statistics published by the Bank of Greece. In BEUR:

12 Months To

2015 2014
March 2015 March 2014
Revenue from abroad

Exports 5,0 5,4
23,1 22,3

Services (e. g. tourism) 4,7 4,7
31,2 28,6

Other income 2,5 3,0
6,3 6,8

Current transfers 0,8 1,0
2,4 4,7

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

Total revenue from abroad 13,0 14,1
63,0 62,4

Expenses abroad

Imports 9,2 10,0
40,6 39,6

Services (e. g. tourism) 3,1 2,7
11,9 11,2

Other expense (e. g. interest) 2,0 1,7
7,0 6,6

Current transfers 0,9 0,9
2,9 2,8

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

Total expenses abroad 15,2 15,3
62,4 60,2

Net foreign deficit (current account) -2,2 -1,2
0,6 2,2

Trade balance -4,2 -4,6
-17,5 -17,3
Services balance 1,6 2,0
19,3 17,4
Other balance 0,5 1,3
-0,7 0,2
Current transfer balance -0,1 0,1
-0,5 1,9

---- ----
---- ----
Net foreign deficit (current account)  -2,2 -1,2
0,6 2,2

1) Revenues declined by 1,1 BEUR in the 1st quarter of 2015 relative to the previous year. That would have been less worrisome if it related to EU transfers. Some of it does but the bulk comes from a decline in 'normal' exports (excluding oil). Such exports declined by 8% in the 1st quarter.
2) What makes this even more worrisome is that 'normal' imports (exluding oil) jumped by 9%. Stale or declining exports and rising imports? Well, I have heard that before.
3) A 1 BEUR decline in the quarterly current account balance (particularly when it goes from negative to very negative) is not something which one can ignore. During the rolling 12-month period ending in March 2015, the current account balance deteriorated by 1,6 BEUR but was still positive. Now the rate of deterioration is far greater and we are in the negative range!


  1. You may not have noticed, since you don't live here permanently, but people are buying imports as if there was no tomorrow, and maybe they are right. It started in January and has picked up since then. It is a rough 50/50 split between luxury goods and production materials. at least 2 factors are driving it, they think that their money are not safe in the banks and that import restrictions are imminent.

    1. In early 2012, when Greece's current account balance started improving dramatically, I wrote to my contact at the Bank of Greece to congratulate him on that performance. He said that there was nothing to congratulate. The improvement was strictly a function of suppressed domestic demand. As soon as there would be a bit more money to spend, imports would go up again. Unless, he said, there were to be substantial structural reforms (whatever he meant by that). Well, it seems that he was right.

  2. Après nous, le déluge (After us, the deluge)?


  3. Yes, that is also a factor, some people think that the flow of money from EU will resume soon. Your banking friend is wise, however he forgot to tell you that to achieve "substantial structural reform" the majority of Greeks would have to adopt another mind set and different values.

  4. Mr. Tsipras, "I beseech you in the bowels of Christ; think it possible you may be mistaken". Mr. Tsipras answer to that plea can be found above, courtesy of H. Trickler. Cromwell did not avert the coming battle, bloodshed and civil war with his plea, but he tried.