January 25, 2013 / 10:46 AM / 5 years ago

UPDATE 1-Greek current account gap narrows on recession, debt cut

* Greek current account gap narrows 73 pct y/y
    * Drop reflects falling imports and debt payments
    * Export performance weak, tourism drops

    ATHENS, Jan 25 (Reuters) - Greece's current account gap
narrowed by more than two-thirds in the year to November due to
falls in imports by austerity-hit consumers and lower interest
payments after a sovereign debt cut.
    According to figures from the Greek central bank released
said on Friday, the current account balance narrowed by 63
percent in November to 850.3 million euros ($1.14 billion). This
brought the January-November gap to 5.05 billion euros, 73
percent lower than in the same period last year.
    The current account balance is a key measure for how
competitive a nation's economy is and on whether it lives within
its means. The reading deteriorated during Greece's debt-fuelled
economic boom to a record deficit of 14.7 percent of gross
domestic product in 2008.
    But a severe economic contraction, partly due to austerity
measures as part of the country's international bailout, is
expected to narrow the gap to 4.2 percent in 2012 and almost
eliminate it in 2014, according to IMF estimates.
    Still, the biggest part of the improvement so far does not
reflect improving economic competitiveness but rather falling
imports, as austerity-hurt businesses and households cut down on
their purchases of foreign machinery and consumer goods that are
not produced at home.
    Imports dropped by an annual 12 percent to 38.61 billion
euros in Jan-Nov, according to central bank figures. Exports of
products, excluding fuels processed by the country's two
refineries, rose by a mere 2.4 percent over the same period to
12.57 billion.
    Tourism, the country's chief money spinner, did not help
either, falling by 4.6 percent to 9.89 billion euros. Arrivals
from Germany, Greece's biggest tourism market, dropped by almost
a fifth, partly on fears about a backlash on German tourists
caused by Berlin's tough austerity demands on Athens.
    But interest payments on Greece's sovereign debt dropped
sharply after a 75 percent writedown Athens imposed on private
sector bondholders back in March. The income account balance,
which reflects such payments, narrowed by 72 percent to 2.13
    Greece's foreign exchange reserves stood at 6.0 billion
euros at the end of November, the Bank of Greece added.
    KEY FIGURES (bln euros)     2012      2011
    November                  -0.850     -2.284            
    October                   -0.684     -1.469
    September                 +0.775     -1.069
    August                    +1.601     -0.103
    July                      +0.642     -0.880
    June                      -0.274     -1.598
    May                       -1.194     -1.922
    Jan-Nov.                  -5.050    -18.491
    source: Bank of Greece

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