Euro area’s current account surplus rises slightly in August, likely to dip in whole of Q3
Source: FxWire Pro - Commentary / 19 Oct 2018 15:18:58 America/New_York
Euro area’s current account surplus rose slightly in August after falling markedly to below EUR 20 billion for the first time in 18 months in July. The surplus rose to EUR 24 billion, with the rebound being driven by a rise in goods trade and primary income balances, while the services trade balance deteriorated.
However, the figure for August was still below the average level of over EUR 33 billion seen in the first half of this year. With goods imports continuing to outpace exports, the downwards trend in the current account appears set to continue.
“Indeed, over Q3 as a whole, the current account surplus looks set to dip further to around 2½ percent of GDP, from Q2's level of 3¼ percent, which itself was the lowest in four quarters”, stated Daiwa Capital Market Research in a report.
Meanwhile, the financial account continued to underline the ongoing net capital outflows because of developments with respect to portfolio investment, especially long-term debt securities. However, the rate of net portfolio outflows has decelerated considerably from the peak in 2016, which was associated with the ECB’s QE program.
“With the ECB now on track to end its net asset purchases at the end of the year, and yields expected to move gradually higher, the outflows might be expected to ease further. However, much might depend on developments in Italy” noted Daiwa Capital Market Research.
The net outflow of EUR 18 billion was not especially large compared to the net outflow close to EUR 35 billion in May and June, but the coming months’ data appear likely to indicate a much more rapid sell-off in the autumn.
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