Very steep decline in current account surplus

In April 2022, Germany’s current account recorded a surplus of €7.4 billion, down €11.3 billion on the previous month’s level. This was chiefly due to a decrease in the goods account surplus, but was also attributable to a somewhat lower surplus in invisible current transactions, which comprise services as well as primary and secondary income.

In April, the surplus in the goods account fell by €10.8 billion on the month to €2.0 billion because receipts recorded a sharper decline than expenditure.

The surplus in invisible current transactions declined by €0.5 billion to €5.4 billion in April 2022. Net receipts in primary income fell by €2.7 billion to €10.7 billion, largely on account of higher dividend payments to non-residents from portfolio investment. By contrast, the deficit in the services account narrowed by €1.9 billion to €0.7 billion. Expenditure decreased more sharply than receipts, with lower expenditure on transport services and other business services making a major contribution to this development. On top of this, the deficit in secondary income contracted slightly by €0.3 billion to €4.6 billion. 

Portfolio investment sees net capital exports

In April 2022, financial markets continued to be influenced by Russia’s invasion of Ukraine and rising inflation rates. Germany’s cross-border portfolio investment generated net capital exports of €7.4 billion (March: €16.9 billion). Non-resident investors disposed of German securities to the tune of €17.9 billion net, selling bonds (€7.5 billion) – especially those issued by the public sector – and money market paper (€7.1 billion). They also offloaded shares issued in Germany (€3.7 billion), while adding mutual fund shares worth €0.5 billion net to their portfolios. Domestic investors parted with foreign securities worth €10.5 billion net, disposing of foreign bonds to the tune of €16.8 billion. By contrast, they acquired foreign shares (€3.6 billion), mutual fund shares (€2.2 billion) and money market paper (€0.5 billion).

In April, transactions in financial derivatives recorded net outflows (€3.8 billion).

Direct investment generated net capital exports of €13.6 billion in the reporting month (March: net capital imports of €3.8 billion). Domestic enterprises injected their affiliates abroad with direct investment funds totalling €30.1 billion, boosting equity capital by €9.5 billion and granting additional loans amounting to €20.5 billion on balance. These funds were provided almost exclusively as financial loans. Conversely, non-resident enterprises stepped up their direct investment in Germany by €16.5 billion, raising their equity capital by €1.1 billion. In addition, they granted €15.3 billion in loans to affiliated enterprises in Germany.

Other statistically recorded investment – which comprises loans and trade credits (where these do not constitute direct investment), bank deposits and other investments – registered net capital imports amounting to €27.1 billion in April (following net capital exports of €2.5 billion in March). While cross-border transactions balanced out for enterprises and households, all other economic sectors recorded net capital imports. For example, the Bundesbank’s net claims declined by €16.2 billion, with its TARGET2 claims decreasing by €34.6 billion. At the same time, the Bundesbank’s external liabilities also fell significantly, as non-euro area residents reduced their deposits with the Bundesbank. Monetary financial institutions (excluding the Bundesbank) recorded net capital imports of €9.1 billion and general government also registered a rise in its net external liabilities in other investment (€1.7 billion).

The Bundesbank’s reserve assets rose – at transaction values – by €0.1 billion in April.