And now it looks very likely that the current account may again have returned to deficit in 2016. The final figures are not out yet but by end of November 2016, there was already a deficit of 171 MEUR (a surplus of 990 MEUR a year earlier) and December is typically a negative month. Thus, 2016 will in all likelihood see a current account deficit between 500-1.000 MEUR.
What is happening here?
It seems prudent to wait with a detailed analysis until the figures for the full year are out. Based on the figures for 11 months, a few observations can be made: (1) it seems that tourism, while a record year in terms of number of visitors, was not such a record year in terms of net receipts; (2) it seems that regular exports (excluding oil and shipping) declined whereas regular imports increased; and (3) other income from abroad which is not specifically defined in the preliminary figures seems to have declined significantly, too.
But those are only the answers. What are the reasons for these declines?
Skeptics about Greece’s enormous current account improvement have always argued that it came about by way of killing demand for foreign products and not as a result of structural changes (import substitution, export promotion). The warning was that the current account would quickly return to deficit once the economy stabilized because demand for foreign products would then return.
Could it be that Greece’s return to a current account deficit in 2016 signals that the economy (the official one, the black one or both) has stabilized in 2016? That perhaps demand returned and was directed at foreign products?