The most surprising thing on December set of data on balance of payments was the revision of the excellent prelimi-nary C/A for November. The deficit was revised up from USD –217 m to USD –417 m as a result of the revision of unclassified flows surplus from the record breaking USD 637 m to the ‘normal’¨USD437 m. In the end, the ex-change of old banknotes held by households prior to the introduction of the cash euro did not have as beneficial impact on the current account as we expected based on November figures. And as the December unclassified flows were also only ‘normal,’ the current account deficit for December of USD 460 m was by 300 m wider than we were looking for.
Nevertheless, the foreign trade keeps improving, owing to the decelerating domestic demand. In December, export in USD declined by 7.7% y/y, however, imports slump by 9.5% y/y. The trade deficit was thus by USD 150 m lower than in December 2000.
Over the 2001, the trade balance deficit narrowed by 11.3%, while the current account gap narrowed by almost 30%. In relation to GDP, the C/A gap declined to 4.0%.
Although the December result was certainly disappointing, it was only the result of extraordinary factors. The foreign trade deficit keeps improving and will pose no serious problem until the domestic demand revives. Until then, however, the revival in Europe should help to offset this influence.
The FDI worth USD 941m in December went into the banking sector (Kredyt Bank, Big Bank Gdanski). Over the 2001, the financial account surplus shrank to less than 50%. Both the direct and portfolio investments declined by 30% y/y, while the other investment deficit widened.