·
Four Central European
countries reported their October current account results during the day
yesterday, December 13. Yesterday
in this commentary, we noted that the improvement in Japan's surplus in
the month resulted from lower petroleum imports, which were augmented by
complementary advances in other current account components.
Today, we see that for Poland, Bulgaria, Slovenia and Serbia,
developments in those other current account items – services, income
and transfers – helped during the summer to mitigate the impact on the
current account of larger petroleum imports.
But this counterbalance can't be counted on every month and
sometimes such increases in merchandise trade deficits are enlarged.
·
Poland is a good
example: its current
account deficit widened to $1.23 billion in October from just $82
million in September and $940 million a year ago.
As seen in the graph, in most months, the trade portion is only
about half the total current account balance.
The deficit on income, particularly rising income payments
abroad, make for a more complex current account situation.
· In Bulgaria, the current account deficit has been steady the last three months at just over $500 million, even as imports of goods have fallen from their August peak of $2,139 million to $1,896 billion. Goods exports also fell and the net on services, generally a surplus in Bulgaria, declined to virtually zero. The moves are small, but they still indicate the intricacy of international trade and financial flows.
·
Serbia's current
account position receives considerable support from transfer payments.
As seen in the graph, the deficit on goods and services is
heavily offset by transfer receipts.
As we point out here, though, the flows do not come in lockstep,
so in October transfers went down at the same time as the goods and
services balance.
· Finally in Slovenia, the trade deficit is offset to some degree by a continuing small surplus in services, although income accounts generally show net outflows and transfers are erratic in both directions.