Steep rise in current account surplus

The German current account recorded a surplus of €20.8 billion in February 2022, up €8.4 billion on the previous month’s level. This was mainly attributable to an increase in the goods account surplus. Conversely, the surplus in invisible current transactions, which comprise services as well as primary and secondary income, contracted slightly.   

In February, the surplus in the goods account rose by €9.3 billion on the month to €15.1 billion because receipts expanded much more sharply than expenditure.

The surplus in invisible current transactions declined marginally by €0.9 billion to €5.7 billion in February 2022, whereas the slight deficit of €0.3 billion in the services account in January turned into a marginal surplus of €0.5 billion in the reporting month. Expenditure decreased somewhat more sharply than receipts, which was attributable to small movements in several sub-items. Net receipts in primary income fell by €2.4 billion to €10.7 billion. While receipts contracted marginally, non-residents’ expenditure on portfolio investment rose in particular. By contrast, the deficit in the secondary income account narrowed from €6.1 billion to €5.4 billion in February. 

Inflows in portfolio investment

Russia’s invasion of Ukraine in February 2022 triggered strong market reactions in the financial markets; these reactions were also partly reflected in the cross-border activities of market participants. Germany’s cross-border portfolio investment generated net capital imports of €10.3 billion (January: net capital exports of €29.9 billion). Foreign investors purchased German securities to the tune of €6.7 billion net, with demand oriented primarily at bonds (€20.1 billion). They chiefly sought paper issued by the Federal Government, which is regularly in demand as a safe investment in periods of high uncertainty. Conversely, they parted with money market paper (€12.1 billion), shares (€0.9 billion) and mutual fund shares (€0.3 billion). Domestic investors disposed of foreign securities to the amount of €3.6 billion net. In light of the ongoing war, they sold a relatively large volume of shares (€6.0 billion). They also divested themselves of money market paper (€3.5 billion) and mutual fund shares (€1.3 billion), but added bonds – primarily those denominated in euro – to their portfolios (€7.2 billion).

In February, the balance of financial derivatives recorded net outflows (€4.8 billion). 

Direct investment generated net capital exports of €11.1 billion in the reporting month (January: net capital imports of €6.0 billion). Domestic enterprises increased their foreign direct investment (€10.3 billion), boosting their equity capital in non-resident enterprises by €10.8 billion, mainly through reinvested earnings. German enterprises paid off their intra-group loans on balance (€0.6 billion). Conversely, non-resident enterprises withdrew direct investment funds from their affiliates in Germany to the tune of €0.8 billion net. Intra-group lending saw outflows of €2.7 billion. By contrast, non-resident enterprises increased their equity capital in German affiliates by €1.9 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 €3.6 billion in February (following €18.8 billion in January). The Bundesbank’s net claims grew by €33.6 billion. While TARGET2 claims remained virtually unchanged, the Bundesbank’s liabilities arising from the deposits of non-euro area residents went down (€33.0 billion). By contrast, monetary financial institutions (excluding the Bundesbank) recorded net capital imports (€26.3 billion). Transactions by general government resulted in net inflows of funds from abroad (€7.1 billion), whereas transactions by enterprises and households led to outflows of funds (€3.4 billion).

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