The current account balance measures the flow of income and payments across borders for goods, services, income, and transfers. It reported a surplus of 4.4 billion euros through October, reflecting a 55.1% decline from the same period last year. The Bank of Spain conveyed this figure in its latest release on Friday, underscoring how shifts in trade and income streams have altered Spain’s external position.
In the first ten months of the year, the development of the current account can be traced to two main forces: a weaker primary income block and a softer secondary income block, paired with a diminished surplus in goods and services. Primary income includes wages, investment returns, and taxes and subsidies related to production and imports, while secondary income covers personal transfers, current taxes, social contributions, and social benefits. The overall effect has been a smaller surplus, driven by reduced earnings from goods and services and by lower net primary and secondary incomes.
The balance for goods and services shows a notable contraction, falling from 18.1 billion euros in the previous year to 15.7 billion euros in 2022. Yet there is nuance in the picture: tourism and travel have delivered an improvement, with a substantial surplus observed in the tourism sector during January through October 2021, though the latest data reflect a rebalanced dynamic as the year progressed. According to the Bank of Spain, this shift partly offsets other deteriorations in the current account balance.
On the income side, both primary and secondary components contributed to a deficit. The combined deficit reached 11.3 billion euros for January through October, compared with about 8.3 billion euros recorded in the same period a year earlier. This widening deficit signals weaker earnings from work, investments, and related taxes and subsidies, alongside lower net transfers into Spain from abroad.
Turning to the capital account, this section recorded a surplus in the first ten months of the year, reaching 8.5 billion euros, up from 6.6 billion euros in the previous year. The divergence between current and capital accounts demonstrates a mixed external position, with the capital account providing some offset to the current account’s weakness and playing a crucial role in financing needs or capacity for the economy.
Combining these strands, the total balance of the current and capital accounts — the key indicator of Spain’s financing capacity — declined from a 16.3 billion euro surplus in the January–October period of 2021 to a 13.0 billion euro surplus in the same period of the present year. This outcome highlights how the economy’s external financing dynamics have shifted, reflecting both weaker current-account components and a still supportive capital account.
Data for October alone show a current account surplus of 2.7 billion euros, compared with 3.5 billion euros in October of the prior year. This month-level signal aligns with the broader trend of the year and emphasizes the evolving balance between goods, services, and income flows as seasonal patterns unfold. The Bank of Spain notes that monthly fluctuations can mask longer-term trajectories, but the October figure remains an important barometer of the year’s external performance.
Capital inflow of 36,900 million by October
In the first ten months of 2022, Spain recorded a capital inflow totaling 36.9 billion euros, up from 26.0 billion euros in the previous year. This capital movement reflects the net effect of outward investments by Spanish residents abroad and the inflow of foreign investments into Spain across the same period, shaping the country’s external financial position.
Capital inflows and outflows together form a balance that accounts for the asset and liability movements associated with international investment. When evaluating only monthly data rather than cumulative year data, October showed a capital inflow of 6.1 billion euros, contrasted with an outflow of 4.2 billion euros in October a year earlier. This monthly snapshot underscores the volatility and cyclicality of cross-border capital flows, which in turn influence the broader external accounts and financing conditions for the economy.