A Smaller Current Account and Larger Capital Outflows in the January-August Eurozone Balance of Payments

Data on the balance of payments for the the period January through August for the Euro-zone showed a marked decline in the current account to 2,500 million Euros from 35,600 million in the corresponding period of last year. The slowdown in global demand earlier this year and the appreciation in the Euro were major factors in the decline.

Net direct investment by the Euro-zone resulted in a small capital outflow of 300 million euros in contrast to the sizeable outflow of 29,200 million in the January-August period of 2002. Net portfolio investment, however, resulted in an outflow 24,300 million so far this year in contrast to a net inflow of 40,600 million euros in the same period of 2002 and "other investments," largely short-term, also resulted in substantial capital outflows.

The errors and omission item in the balance of payments is a reflection of the difficulty of measuring accurately the various accounts, particularly capital flows. The 60,600 million euro errors and omissions in the January-August period of this year reflects current or capital inflows that have not been accounted for.