Current account surplus down

Germany’s current account recorded a surplus of €11.8 billion in August 2021, down €6.1 billion on the previous month’s level. While the surplus in invisible current transactions, which comprise services as well as primary and secondary income, saw a slight increase, the surplus in the goods account declined much more sharply.   

In August, the surplus in the goods account decreased by €6.5 billion on the month to €11.0 billion, with exports of goods contracting more sharply than imports.

The surplus in invisible current transactions grew by €0.4 billion to €0.7 billion in August. This was primarily caused by increases in the balances of primary and secondary income. Net receipts in primary income rose by €2.0 billion to €10.3 billion, largely on account of lower dividend payments to non-residents from portfolio investment. In addition, the deficit in secondary income fell by €1.0 billion to €4.8 billion, with lower general government expenditure playing a role in particular. Although payments to the EU budget in connection with financing related to gross national income went up, there was a stronger countermovement in expenditure on current transfers relating to international cooperation, which had risen significantly in July. By contrast, the deficit in the services account widened by €2.6 billion to €4.8 billion. Receipts in this account declined, which was attributable in particular to other business services and charges for the use of intellectual property. Furthermore, the decreases and increases in the expenditure sub-items effectively balanced each other out. As is typical for this time of the year, travel expenditure grew considerably as the improved pandemic conditions increased the opportunities for travelling abroad again.

Portfolio investment sees inflows

In August 2021, international financial markets proved to be largely robust despite unexpectedly high inflation rates, with share prices tending to rise and few changes in exchange rate movements. It was against this backdrop that Germany’s cross-border portfolio investment recorded net capital imports of €3.6 billion (after net capital exports of €33.0 billion in July). Foreign investors acquired German securities worth €14.5 billion, investing in money market paper (€10.7 billion) and bonds (€4.5 billion). Their stocks of shares and mutual fund shares remained unchanged on balance. Domestic investors added €10.9 billion worth of securities issued by non-residents to their portfolios, purchasing mutual fund shares (€8.6 billion), shares (€7.1 billion) and money market paper (€0.6 billion). At the same time, they disposed of foreign bonds (€5.5 billion).

In August, the balance of financial derivatives recorded net inflows (€5.7 billion).

Direct investment recorded net capital exports of €3.5 billion in August (July: €9.7 billion). Domestic enterprises increased their foreign direct investment by €6.1 billion. They boosted their equity capital in non-resident enterprises by €9.1 billion, of which just under two-thirds was through reinvested earnings. By contrast, redemptions predominated in intra-group lending (€3.0 billion). Non-resident firms injected their affiliated enterprises in Germany with direct investment funds worth €2.6 billion. They raised their equity capital by €1.6 billion, and another €1.0 billion was added through additional intra-group loans.

Other statistically recorded investment – which comprises loans and trade credits (where these do not constitute direct investment), bank deposits and other investments – registered net inflows amounting to €14.5 billion in August (following €47.5 billion in July). The Bundesbank recorded net capital imports of €30.4 billion. Although TARGET2 claims on the ECB rose by €12.3 billion, the Bundesbank’s liabilities also increased considerably at the same time. This is because the IMF granted the Bundesbank new special drawing rights in August, which was reflected in a higher counterpart on the liabilities side of the Bundesbank's balance sheet. Furthermore, there was a rise in the deposits of non-euro area residents. Monetary financial institutions (excluding the Bundesbank) also recorded net capital imports (€3.3 billion). Transactions by enterprises and households (€15.7 billion) and by general government (€3.5 billion) each led, on balance, to net capital outflows.

The Bundesbank’s reserve assets grew – at transaction values – by €31.3 billion due to the IMF’s allocation of new special drawing rights in August, as mentioned above.