Portugal’s balance of payments negative €887M until August – Bank of Portugal

The combined current and capital account balance stood at -€887 million up to August, compared with €1.146 billion in the same period of 2019, according to data published by the Bank of Portugal.

“The balance up to August results from the deficits in goods and primary income balances, which were partially offset by the surpluses in services, secondary income and capital balances,” it pointed out.

In the first eight months of 2020, the goods balance deficit was €3.118 billion down on the same period of the previous year.

However, the services surplus was reduced by €6,527 billion.

“This reduction was mostly justified by the sharp decrease in the balance of travel and tourism, of €5,602 billion,” said the BdP.

Up to August, exports of goods and services decreased 23.6% (13.6% in goods and 39.7% in services) and imports decreased 18.4% (16.9% in goods and 25% in services).

In August, exports and imports of goods and services registered year-on-year decreases of 25.3% and 15.7% respectively.

The year-on-year reduction in the balance of travel and tourism by €1.313 billion, resulting from a 51.8% decrease in credits and 40.7% in debits, was noteworthy.

Between January and August 2020, the primary income balance deficit was reduced by €1.227 billion euros concerning the same period, to -€2.380 billion, the central bank said.

“The decrease in the deficit was largely justified by the reduction in the payment of investment income to non-resident entities. The secondary income account surplus decreased by €93 million, due to the evolution of current transfers. In turn, the capital account balance grew by €242 million over the same period of the previous year, mainly as a result of an increase in receipts from EU funds,” it said.

Up to August 2020, the financial account balance recorded a decrease in Portugal’s net assets vis-à-vis the rest of the world of €703 million.

This decrease was mainly due to the increase in BdP’s liabilities to the Eurosystem and investment by non-residents in Portuguese public debt securities.

In contrast, there was an increase in assets of banks and insurance companies and pension funds on non-resident entities, namely in debt securities issued by member states of the Monetary Union, and a reduction in deposits by non-residents with banks located in Portugal.