Rise in current account surplus

The German current account recorded a surplus of €22.6 billion in February 2023, up €5.6 billion on the previous month’s level. While the surplus in invisible current transactions, which comprise services as well as primary and secondary income, decreased, the surplus in the goods account expanded to a greater extent. 

In the reporting month, the surplus in the goods account increased by €7.3 billion to €19.0 billion because receipts rose and expenditure fell. 

The surplus in invisible current transactions declined by €1.7 billion to €3.6 billion, largely because the deficit in the services account expanded by €1.1 billion to €2.6 billion. Expenditure decreased overall, driven primarily by lower expenditure on other business-related services. However, receipts declined more sharply, as, in addition to reduced receipts from these services, receipts from transport services, fees for the use of intellectual property and financial and manufacturing services also fell markedly. Moreover, the deficit in the secondary income account expanded by €0.5 billion to €6.0 billion. Higher non-government and government expenditure contributed to this increase. This was due, in particular, to increased general government payments to the EU budget in connection with financing related to gross national income. The decline in expenditure on current transfers relating to international cooperation did not offset this. Net receipts in the primary income account remained broadly unchanged at €12.3 billion.

Portfolio investment sees net capital exports

In February 2023, financial markets were characterised by a brighter global economic outlook, while hopes of a rapid decline in inflation rates waned on both sides of the Atlantic. Germany’s cross-border portfolio investment generated net capital exports of €19.3 billion (January: €26.6 billion). German investors increased their holdings of foreign securities by €17.4 billion, acquiring bonds (€12.2 billion), mutual fund shares (€3.3 billion) and shares (€2.3 billion). By contrast, they disposed of a small volume of money market paper (€0.4 billion). Conversely, foreign investors sold German securities on balance (€2.0 billion). They reduced their holdings of money market paper (€11.7 billion) and shares (€1.3 billion), while adding bonds (€10.1 billion) and mutual fund shares (€1.0 billion) to their portfolios.

In February, transactions in financial derivatives recorded outflows of €7.3 billion (January: outflows of €9.4 billion). 

Direct investment recorded net capital exports of €18.1 billion in February (January: €4.2 billion). German enterprises increased their direct investment funds abroad by €27.5 billion. They granted additional intra-group loans (€15.0 billion), predominantly in the form of financial loans. Additionally, domestic companies injected their foreign affiliates with additional equity capital (€12.5 billion), with reinvested earnings playing an important role. In the opposite direction, foreign enterprises also increased their investment in Germany (€9.5 billion). They increased the volume of loans issued to German enterprises (€6.8 billion), doing so exclusively by granting more financial loans. They also stepped up their equity capital in German affiliates by €2.6 billion, almost exclusively by reinvesting earnings.

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 of capital amounting to €15.9 billion in February (following €29.3 billion in January). The net external claims of monetary financial institutions excluding the Bundesbank fell by €5.6 billion, while those of the Bundesbank increased by €5.3 billion. TARGET2 claims on the ECB fell by €47.5 billion. At the same time, however, deposits – mainly from non-euro area residents – also decreased. By contrast, enterprises and households (€13.9 billion) and general government (€1.6 billion) recorded net capital imports.

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