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

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Fri Jan 25, 2013 5:41am EST

  * 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  billion.      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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