Rise in current account surplus

The German current account recorded a surplus of €29.8 billion in February 2024, up €1.8 billion on the previous month’s level. Although the surplus in invisible current transactions, which comprise services as well as primary and secondary income, declined, the surplus in the goods account grew by an even wider margin.   

In the reporting month, the surplus in the goods account increased by €3.0 billion to €27.2 billion because receipts grew whilst expenditure remained virtually unchanged.

The surplus in invisible current transactions contracted by €1.1 billion to €2.5 billion, crucially because of a reduction in net receipts in primary income (€10.3 billion following €12.4 billion in January). While receipts contracted slightly in February, expenditure on dividend payments to non-residents for their portfolio investment rose in particular. The deficit in secondary income, at €4.6 billion, was only marginally larger than in the previous month. By contrast, the deficit on the services account narrowed by €1.2 billion to €3.1 billion. A closer look at this account reveals a preponderance of smaller declines in multiple items on both sides of the balance sheet yet markedly lower expenditure on other business services.

Portfolio investment sees net capital imports

In February, the international financial markets were influenced by continued robust US economic growth and a somewhat higher-than-expected rate of inflation in the United States. Germany’s cross-border portfolio investment recorded net capital imports of €5.4 billion (after €3.7 billion in January). Non-resident investors added €14.0 billion worth of German securities to their portfolios on balance. They purchased bonds on a larger scale (€23.4 billion), mostly public bonds, whilst offloading holdings of money market paper (€8.6 billion), mutual fund shares (€0.5 billion) and shares (€0.3 billion) in net terms. Conversely, investors in Germany acquired €8.6 billion net worth of foreign securities. They invested in bonds (€5.2 billion), mutual fund shares (€3.2 billion) and money market paper (€1.5 billion) but sold foreign shares (€1.4 billion). 

In February, transactions in financial derivatives resulted in net outflows of €5.6 billion (following €2.5 billion in January).

Direct investment recorded net capital exports of €5.8 billion in February (January: net capital imports of €2.9 billion). Viewed in terms of transactions, German foreign direct investment rose by €6.7 billion. German firms boosted their equity capital abroad by €8.3 billion, entirely through reinvested earnings on balance. By contrast, redemptions predominated in intra-group lending (€1.6 billion). Foreign enterprises provided their German affiliates with additional direct investment funds (€0.9 billion), boosting their equity capital (€3.3 billion) and reducing the volume of loans (€2.4 billion).

Other statistically recorded investment – which comprises loans and trade credits (where these do not constitute direct investment), bank deposits and other investments – registered net outflows of capital amounting to €9.8 billion in February (following €13.5 billion in January). The Bundesbank’s higher net claims (€25.0 billion) made a notable contribution to this amount. Its claims on the ECB from TARGET balances went up by €33.6 billion. At the same time, the Bundesbank’s liabilities in the form of cash and foreign deposits increased, albeit to a lesser extent. Monetary financial institutions excluding the Bundesbank recorded net capital imports of €11.7 billion in January in the other investment account. Transactions by enterprises and households (€2.7 billion) and by general government (€0.8 billion) likewise resulted in net capital imports.

The Bundesbank’s reserve assets rose – at transaction values – by €1.2 billion in February.