Monthly Bulletin July 2009 - Banque de France

From the geographical breakdown of euro area goods trade, it emerges that in the first quarter
of 2009 exports to Asia and the OPEC countries appear to have rebounded somewhat, while exports
to the United Kingdom and the United States seem to have stabilised at low levels. However, these
positive developments were overcompensated by the contraction of euro area exports to the rest
of Europe. In terms of broad categories of goods, the most significant declines in export volumes
in the first quarter of 2009 continued to be for capital and intermediate goods, which fell back to
levels not observed since 2004. Import volumes of capital and intermediate goods also experienced
particularly severe declines.
Turning to the other components of the current account, the surplus in services decreased to
€35.2 billion in the year to April 2009 – from €52.0 billion a year earlier. Over the same period,
the deficit in the income account widened from €9.7 billion to €32.5 billion, resulting largely from
lower income receipts from non-euro area residents. Finally, the deficit in current transfers also
increased somewhat.
FINANCIAL ACCOUNT
In the three-month period to April 2009, combined direct and portfolio investment recorded average
monthly net inflows of €34.7 billion, compared with net outflows of €10.8 billion over the previous
three-month period (see Table 7). These developments were primarily due to developments in portfolio
investment, where net inflows in bonds and notes increased from €15.7 billion to €34.8 billion. This
development was driven mainly by robust net purchases of euro area bonds by non-euro area residents,
possibly due in part to an attenuation of investors’ preferences for more liquid and shorter-term
assets. Indeed, net investment in money market instruments remained largely unchanged, posting
a €16.4 billion net inflow in the three-month period ending in April 2009. Meanwhile, equity
investment recorded net outflows of €5.9 billion over the same period, as opposed to net outflows of
€11.3 over the previous three months.
Turning to net direct investment, both foreign
direct investment abroad by euro area residents
and foreign direct investment in the euro area
by non-residents rebounded in the three-month
period to April 2009, possibly signalling
global strategies of market consolidation. As
foreign direct investment in the euro area by
non-residents increased more than foreign direct
investment abroad by euro area residents, net
outflows of direct investment fell to €10.6 billion
over the period, down from €30.6 billion over
the previous three-month period.
Chart 36 Euro area combined direct and
portfolio investment
(EUR billions; monthly data; 12-month cumulated flows)
700
600
500
400
300
net direct and portfolio investment
net foreign direct investment
net debt instruments
net equity flows
700
600
500
400
300
These developments compare with a sizeable
longer-term increase in net inflows in combined
direct and portfolio investment, which, in
the 12-month period to April 2009, rose to
€296.3 billion (compared with net outflows
of €40.3 billion in the same period a year
earlier), mainly driven by a rise in net inflows
in portfolio investment (see Chart 36). The
breakdown of portfolio investment by main
200
100
0
-100
-200
-300
2005 2006 2007
Source: ECB.
2008
200
100
0
-100
-200
-300
60 ECB
Monthly Bulletin
July 2009