Tuesday, January 24, 2017

Why A Current Account Deficit Again?

The improvement in Greece's current account over the last years has got to be one of the great success stories amid the financial catastrophe. The current account deficit had gotten as huge as 36 BEUR in 2008. A staggering figure both in absolute amounts as well as in relation to GDP (about 15%). Anyone predicting at the time that Greece would succeed in bringing the current account into balance would have been considered a dreamer.

However, and literally on a straight line, Greece reduced the current account deficit from year to year only to reach a surplus of 206 MEUR in 2015! A smashing success in terms of numbers. Not in terms of economic effects because the improvements came mostly via curtailing imports instead of expanding exports.

And now it looks very likely that the current account may again have returned to deficit in 2016. The final figures are not out yet but by end of November 2016, there was already a deficit of 171 MEUR (a surplus of 990 MEUR a year earlier) and December is typically a negative month. Thus, 2016 will in all likelihood see a current account deficit between 500-1.000 MEUR.

What is happening here?

It seems prudent to wait with a detailed analysis until the figures for the full year are out. Based on the figures for 11 months, a few observations can be made: (1) it seems that tourism, while a record year in terms of number of visitors, was not such a record year in terms of net receipts; (2) it seems that regular exports (excluding oil and shipping) declined whereas regular imports increased; and (3) other income from abroad which is not specifically defined in the preliminary figures seems to have declined significantly, too.

But those are only the answers. What are the reasons for these declines?

Skeptics about Greece's enormous current account improvement have always argued that it came about by way of killing demand for foreign products and not as a result of structural changes (import substitution, export promotion). The warning was that the current account would quickly return to deficit once the economy stabilized because demand for foreign products would then return.

Could it be that Greece's return to a current account deficit in 2016 signals that the economy (the official one, the black one or both) has stabilized in 2016? That perhaps demand returned and was directed at foreign products?


  1. Typical BS.

    Greece has an obligation to curtail demand for foreign products and more specifically german products.

    Which part of "eff german imports" don't you understand?

    1. @Anonymous at 8:53 PM
      Quote: "Typical BS.

      Greece has an obligation to curtail demand for foreign products and more specifically german products.
      Which part of "eff german imports" don't you understand?"

      So why on earth are the Greeks seemingly do the exact opposite (again)?

    2. @Anonymous at 8.53 PM
      I have tried hard to figure out what your point might be but I didn't manage. Could you perhaps rephrase?

  2. Part of the reason is this.


    Greek households run down on their savings at an advanced rate.

    1. @Jim Slip at 10:35 PM
      Quote: "Greek households run down on their savings at an advanced rate."

      Doesn’t make any sense as an answer to KK’s post. The Greeks start buying foreign made goods again because they "run down on their savings at an advanced rate."?

    2. I think what Slip is saying is that demand for foreign products is financed by a reduction in savings instead of an increase in incomes.

    3. @kleingut at 10:21 AM
      Quote: "I think what Slip is saying is that demand for foreign products is financed by a reduction in savings instead of an increase in incomes."

      I see, but this doesn’t make much sense either as it may explain the funding of but not the reason for the increase in the consumption of imported goods. But maybe there hasn’t even been an increase of imports but just a (further?) decline of exports.

  3. " That perhaps demand returned and was directed at foreign products?"

    Alpha Bank report: 1% drop in consumption in 2016.


  4. Dear Mr. Kastner,

    This is an interesting discussion as always but as in the past i have stated that many imports coming into Greece, or at least in my small world or cycle of sources, are high value investment relative. Mainly infrastructure and equipment. Such imports, are once off and in the relative view of imports exports, such import cost investments are amortized versus the profits of sales exports within 1 - 2 years. You have to understand that Greece aside from what many people state in everyday news, has many healthy companies which the majority of them are export oriented. At my profession, such imports relative to my work alone surpasses 2 mill euro for 2016 and that is just little ol me.

    Even in a smaller circles which is relative to farming investment are being made in equipment for better COG's, as to offset the high taxes and energy costs we need to pay.

    This small circle which i am describing in front of the import/export ratio numbers may be a fraction, but it is certainly not a small fraction or insignificant.

    I can easily count up to 100 mil euro of such investments from my circle just in the year 2016.

    The only way these healthy companies can survive is through such investments, which rely on such infrastructure imports, which equate to better COG's for higher profitability in exports to be made. Whether the imports are coming from German, Italy, France, UK, China, Japan.

    The deficit you mention as i have mentioned in the past, must be analyzed to detailed, what is coming in and what is going out. Greeks in general do not buy foreign products anymore, even further multinationals with factories which produced products produced in Greece. Greek brands are on the rise within Greece and i have hard evidence for this.


  5. 2015 was not really business as usual: that's the year most impacted by capital controls which delayed many imports.

    I suppose comparing with 2014 would be interesting

  6. Urs:

    The problem with you and others here is that you lack credible figures. You grasp at whatever nonsense someone throws at you and then you say "I knew it".

    These are the official Greek export and import figures for the period ending November 2016. Where exactly do you see a rise of imports?


    1. Click here under "Κατά κατηγορίες προϊόντων (μονοψήφια ανάλυση) - By Product categories (single digit analysis)


    2. @Anonymous at 4:11 PM
      Quote: "The problem with you and others here is that you lack credible figures. You grasp at whatever nonsense someone throws at you and then you say "I knew it"."

      1. Your reference is not a valid link and can not be opened by my browser.
      2. Where did I stated that "I knew it"?
      3. Explain the Greek current account deficit.
      4. Please read my last post again. You will find the line: "But maybe there hasn’t even been an increase of imports but just a (further?) decline of exports."

      Bottom line: The problem with you and others here is that you either don’t properly read the posts you refute or that you do not understand them. Sad.

  7. Urs:

    You continue to embarrass yourself by seeking to defend topics out of thin air and without numbers validations to back up your claims.

    The imports for the 11 months ending November 2016 show a tiny increase by 0.5% compared to the same period last year.

    The exports for the same 11-month period show a small decline of 1.9% entirely attributed to petroleum products (roughly 1 billion less sales compared to 2015). As we have said before roughly 40% of all Greek exports are petroleum based sales (2 private groups in Greece import crude oil and then tranform it for sale to gasoline and other petroleum products). So this is a form of arbitrage which sometimes works and sometimes does not.

    All other Greek export categories show improvement over 2015 figures.

    So where you and Klaus get this unfounded thesis that Greece has started to consume more and export less and similar nonsense?

    Don't you understand that mickey mouse publications like ekathimerini are totally biased sources who would sell their mother in Kassandra type rhetoric to prove that the end is near? When would you people (with a hypocritical interest in Greek affairs at least learn how to use the correct sources to make your ridiculous arguments which only show lack of depth and a disturbing propensity to throw stones at your own glass house?

    Greek imports spiked in the month of April and happens every year sometimes in April and sometimes in May when all rental car companies in anticipation for a strong tourist season add more to their fleets and discard older model which are then sold back to the domestic or overseas markets as surplus used cars. What's so difficult in understanding such simple and fundamental trends?


    1. I think you should go to the Bank of Greece website where you find the primary stats which sites like TradingEconomics then work with, correctly or incorrectly. For November, there was a 100% match between BoG and TE, in October there was more than 1/2 million difference.

      If, for some strange reason, you trust a foreign secondary source more than a Greek primary source, feel free but keep in mind that the foreign source is wrong in this case.

      Greek exports/imports consist of 3 major components: oil, shippping and other goods. Oil and shipping do not reflect the domestic economic activity which is why the BoG always says "exports/imports excluding oil and shipping". "Other exports" are what is typically called "tradeable goods".

      "Other exports" were 16,4 BEUR from Jan-Nov 2016, or 2% higher than the year before.

      "Other imports" were 27,9 BEUR from Jan-Nov 2016, or 4% higher than the year before.

      As a BTW, despite all restructuring efforts for over 7 years by now, exports still cover only 62% of imports which has got to be one of the lowest, if not the lowest, ratios among socalled developed economies.

      I recommend caution before blaming others for nonsense because, as the above shows, this blame can easily backfire.

      When imports go up quite a bit, to assume that consumption has increased is more like common sense than non-sensical. Of course, it is an assumption which cannot be proved because one cannot prove anything when it takes place in the black economy.

    2. Klaus:

      This is a free lesson for you since you have decided to play the role of a deliberate ignoramus hiding behind the BOG nonsense figures which apparently you can't even interpret correctly.

      What I am quoting here comes directly from the Greek Export Association and these are figures appearing in their website given above:


      For the 11 months ending November 2016:

      Greek Exports:

      Agricultural product exports for 2016: 5166 Million euros.
      Agricultural product exports for same period in 2015: 4723 Million euros.
      Increase of 2016 over 2015: 9.3%

      Raw material exports for 2016: 896 Mil. euros
      Raw material exports 2015: 904 Mil. euros.
      Decrease of 2016 over 2015: -0.9%

      Fuel exports 2016: 6202 Mil. euros
      Fuel exports 2017: 7050 Mil. euros
      Decrease of 2016 over 2015: - 12%.

      Industrial exports 2016: 10,115 Mil. euros
      Industrial exports 2015: 10,086 Mil. euros
      Increase of 2016 over 2015: 0.3%

      Miscellaneous 2016: 493 Mil. euros
      Misc. 2015: 558 Mil. euros
      Decrease of 2016 over 2015: - 11.7%

      Total exports 2016: 22,872 Mil. euros
      Total exports 2015: 23,324 Mil. euros
      Decrease of exports 2016 over 2015: -1.9%

      Greek Imports:

      Ag product imports 2016: 5582 Mil. euros
      Ag product imports 2015: 5323 Mil. euros
      Ag product increase 2016/2015: 4.9%

      Raw material imports 2016: 953 Mil. euros
      Raw material imports 2015: 995 Mil. euros
      Decrease of raw material imports 2016/2015: -4.2%

      Fuel imports 2016: 8,589 Mil. euros
      Fuel imports 2015: 10,349 Mil. euros
      Decrease of fuel imports 2016/2015: -17%

      Industrial imports 2016: 23,956 Mil. euros
      Industrial imports 2015: 22,291 Mil. euros
      Increase of Ind. imports 2016/2015: 7.5%

      Misc. imports 2016: 40 Mil. euros
      Misc. imports 2015: 73 Mil. euros
      Decrease of Misc. imports 2016/2015: - 44.3%

      Total imports 2016: 39,119 Mil. euros
      Total imports 2015: 39,031 Mil. euros
      Increase of imports 2016/2015: 0.2 %

  8. Klaus:

    Enough with the nonsense of the BOG. I give you the direct source of Greek imports and exports which is the only source that matters. The fact that you don't understand or speak Greek is entirely your problem. I can not compensate for your lack of knowledge nor I can force you to learn a difficult foreign language like Greek in late stage life. But what I can do with a fair amount of authority is to compel you to cease and desist from spewing out unfounded nonsense as if you were the press office of Nea Tromokratia aka the Germanophile disgusting construct that thinks that represents Greece.

    This link below is the only credible source for greek exports and imports:


    Study it well and then come here with your uniformed opinions to be graded by me. So far your grade as a self-professed ex-banker is a pityful F. (F = Failure).

    1. Well, if you say enough, then it better be enough, don't you think that that's the way it should work?

      What you call a "credible source" is the Panhellenic Exporters' Association, undoubtedly an excellent source of information. Except, it's not the official source of statistics.

      The official source of all statistics is ELSTAT which reports into Eurostat. For all its stats on trade, etc., ELSTAT gets its figures from the BoG.

      So all I can suggest is: have more confidence in the official institutions of your country!

    2. @Anonymous at 1:20 PM:

      Quote: "Enough with the nonsense..."

      I am marvelled by your efforts to distract attention from the fact that you are at your wits end. Waste of effort I may add.

  9. Klaus:

    Your arguments border the ridiculous and show that you don't really understand that the effing ELSTAT and effing BOG and any other instrument of Troika in Greece is telling you.

    Read my lips.

    When the effing BOG is reporting a 4% increase in imports is when one compares November 2015 to November 2016. So what is so significant that in effing November 2016 Greece imported 4% more that it imported in November 2015?

    Is Greece according to the BOG nonsense (which apparently you can't even understand) is supposed to be in some sort of equal purchases pattern? Variations between months don't count. It's the overall import numbers that count. And when you compare the 11 month period of 2016 to the same 11 month period in 2015 the increase in imports is ONLY 0.2%. Not even an effing 1% difference. In other words perhaps within a statistical error which subsequent revisions might erase altogether.

    What this nonsense exercise tells me is more about you and your biased need to find causes of alarm where none exists.

    Here is my advice to you: Shape up fast if you are going to report facts about my country otherwise you will meet my wrath.

    Is this clear?

    1. Where will I meet your wrath? In Greece? Or perhaps in California?

  10. Everybody his own positive accounting, and the consolidated is garbage.

  11. We have both drones and nuclear weapons. The logistics of meeting my wrath ought to be the least of your problems.

    You main problem is that I can't stand ignorant people who despite shown evidence to the contrary continue with their fruitless propaganda from the well known toilet places in central Europe including the most incompetent country Austria which is posing as an agent of its barbarian neighbors to the north.

    Greece needs no opinion from germans, austrians, swiss, dutch and viking countries like denmark. You can all go to hell as far as I am concerned. And you can stay there as the most ignorant and stupid SOBs that ever walked the face of this earth and clearly no one needs you. The world would be a better place without the idiots of europe which apparently you produce by the millions due to some very well known genetic defect.

    1. @Anonymous at 1:44 PM
      Quote: "Greece needs no..."

      That’s obviously wrong.

  12. How close the heroic is to the comic, and even tragic. The Hellenes knew it, makes you wonder.