Euroland Balance of Payments Worsens

August 25, 2008

The seasonally adjusted current account was in deficit in 1H08 by EUR 25.0 billion or EUR 50 billion at an annual rate.  That constitutes a deterioration from annualized surpluses of almost EUR 11 billion in 2H07 and 19 billion in the twelve months to June 2007.  Meanwhile, the year to mid-2008 saw direct investment outflows climb 18.4% to EUR 203 billion from EUR 172 billion in the previous twelve months and net portfolio capital inflows plung 60% to EUR 149 billion from EUR 372 billion.  In The Economist’s August survey of forecasters, a current account-to-GDP ratio of -0.3% is penciled in for both 2008 and 2009.  Those estimates look too optimistic.



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