Current account balance
In December 2004, the current account deficit fell by euro 263 million over the same month of 2003. As a result, in 2004 as a whole, the current account deficit showed a substantial improvement, as it narrowed by euro 2,235 million relative to 2003 and fell to euro 6,411 million or 3.9% of GDP (compared with 5.6% of GDP in 2003). This improvement is mainly accounted for by a large increase in the services surplus; secondarily, by a rise in the transfers surplus; and, finally, a small decrease in the income account deficit. The above, taken together, more than offset a considerable widening of the trade deficit.
The total trade deficit grew by euro 2,792 in comparison with 2003. Specifically, the euro 3,629 million (or 12.8%) rise in the non-oil import bill more than offset a euro 1,276 million (or 13.0%) rise in non-oil export receipts, while the net oil import bill increased by euro 439 million.
This contrasts with the very favourable developments in the services surplus, which widened by euro 3,961 million or 34.4%, mainly as a result of a very large increase in net transport (mainly shipping) receipts, by euro 2,933 million or 63.1%. A eurp 678 million (or 9.2%) rise in net travel receipts also made a positive contribution. Moreover, the "other" services deficit narrowed considerably (to euro 149 million, from euro 499 million in 2003).
Furthermore, the transfers surplus grew by euro 927 million in 2004, to reach euro 6,015 million. This is almost exclusively accounted for by a substantial increase in general government receipts (mainly transfers from the EU) by euro 1,169 million or euro 21.7%, while general government payments (mainly to the EU) rose by euro 117 million and the net receipts of the "other" sectors (mainly emigrants' remittances) declined by euro 125 million.
Finally, there was a small improvement in the income account deficit, which decreased by euro 140 million or 5.4% in 2004, as net interest, dividend and profit payments fell.

Financial account balance
In 2004 as a whole, non-residents' direct investment in Greece reached euro 1,088 million (compared with euro 586 million in 2003), while residents' direct investment abroad came to euro 489 million (euro 41 million in 2003). It should be pointed out that, albeit relatively low, direct investment flows into Greece further recovered considerably in 2004, in spite of the falling trend of foreign direct investment worldwide. (It should be recalled that the most important direct investments by non-residents in 2004 were the acquisition of PANAFON S.A. by VODAFONE, which was partly effected in 2003 and completed in January and February 2004; the acquisition of the General Bank of Greece by Sociιtι Gιnιrale in March; the acquisition of DELTA SINGULAR OUTSOURCING SERVICES by the US company FIRST DATA in July; the increase in PANEUROPEAN OIL AND INDUSTRIAL HOLDINGS S.A.'s participation in the capital of Hellenic Petroleum S.A. in August; and the acquisition of KOTSOVOLOS S.A. by DIXONS in September.)
In 2004, a substantial net inflow of euro 13,728 million was recorded under portfolio investment, as residents' outflows for investment abroad (mainly purchases of bonds, of euro 10.3 billion) were more than offset by non-residents' inflows for investment in Greece (mainly purchases of Greek government bonds, of euro 21.6 billion).
Finally, a net outflow of euro 9,104 million under "other" investment reflects a euro 6,216 million rise in residents' claims on non-residents, as well as a euro 2,888 million decline in residents' foreign liabilities towards non-residents. The increase in claims in 2004 is exclusively accounted for by the growth in the outflow of residents' (mainly credit institutions') funds (of euro 6.3 billion) to deposits and repos abroad, while the decrease in liabilities was a result of outflows (of euro 2.2 billion) for the repayment of loans (of which euro 1.0 billion for the repayment of general government loans) and - to a lesser extent - a euro 0.7 billion decline in non-residents' deposits and repo holdings in Greece.
At end-2004, Greece's reserve assets came to euro 2.0 billion, compared with euro 4.6 billion at end-2003. (It should be recalled that since the first months of 2003 the Bank of Greece has started to diversify its portfolio, by reducing its non-euro area currency holdings, which are included in reserve assets, and by increasing its higher-yield or euro-denominated assets - mainly bonds issued by euro area Member States, which are not included in reserve assets. Given that there is less need to maintain high foreign currency reserves, by the above diversification the Bank of Greece has improved the return on its investments. It has been noted repeatedly that, since Greece joined the euro area in January 2001, reserve assets, as defined by the European Central Bank, include only monetary gold, the reserve position in the IMF, special drawing rights, and Bank of Greece claims in foreign currency on residents of non-euro area countries. Conversely, reserve assets do not include claims in euro on residents of non-euro area countries, claims in foreign currency and in euro on residents of euro area countries, and the Bank of Greece participation in the capital and the reserve assets of the ECB.)

Note: Balance of payments data for January 2005 will be released on 21 March 2005.