Current account surplus down

Germany’s current account recorded a surplus of €16.0 billion in July 2024, down €4.6 billion on the previous month’s level. This was attributable to a lower goods account surplus and a higher deficit in invisible current transactions, which comprise services as well as primary and secondary income.

The surplus in the goods account fell by €2.1 billion to €19.5 billion in July because expenditure increased more sharply than receipts. The deficit in invisible current transactions grew by €2.5 billion to €3.5 billion, which was chiefly due to the deficit in the services account widening by €3.1 billion (to €10.0 billion). This increase was primarily attributable to the overall rise in expenditure, with higher spending on IT services and charges for the use of intellectual property playing a key role here. Moreover, the deficit on the secondary income account expanded by €0.6 billion to €5.2 billion. While government and non-government expenditure fell, receipts declined even more sharply, mainly owing to lower general government revenue from current taxes on income and wealth. By contrast, net receipts on primary income went up by €1.2 billion to €11.7 billion. Although revenue went down, chiefly as a result of residents’ reduced receipts from portfolio investment and other investment income, expenditure decreased more strongly, with lower dividend payments to non-residents in particular contributing to this decline.

Portfolio investment sees net capital exports

Germany’s cross-border portfolio investment recorded net capital exports of €8.5 billion in July, after net capital imports of €3.5 billion in June. Domestic investors purchased foreign securities worth €19.2 billion net, adding foreign mutual fund shares (€9.9 billion), bonds (€5.8 billion), shares (€2.4 billion) and money market paper (€1.2 billion) to their portfolios. Foreign investors acquired German securities worth €10.7 billion net, purchasing bonds in particular (€21.2 billion) – these were exclusively public bonds on balance. They bought €0.6 billion net worth of mutual fund shares. By contrast, non-residents had net sales of money market paper (€9.9 billion) and parted with a small volume of shares (€1.1 billion).

In July, transactions in financial derivatives resulted in net outflows of €5.9 billion (€4.8 billion in June).

Direct investment generated net capital imports of €1.9 billion in July (following net capital exports of €3.5 billion in June). Foreign enterprises stocked up their direct investment funds in Germany by €8.2 billion. They increased their volume of intra-group loans (€6.7 billion) and also, to a limited extent, their equity capital (€1.5 billion). Viewed in terms of transactions, German foreign direct investment rose by €6.3 billion. German enterprises stepped up their equity capital abroad by €7.6 billion. With regard to intra-group credit transactions, redemptions predominated on balance (€1.3 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 €24.7 billion in July (following €9.4 billion in June). The higher net claims of monetary financial institutions, which rose by €51.9 billion, made a particularly large contribution to this amount. Enterprises and households (€2.0 billion) and general government (€1.1 billion) likewise recorded net capital exports in July. The Bundesbank’s net external claims declined by €30.2 billion. This was due to lower TARGET claims on the ECB, which went down by €42.0 billion. However, the Bundesbank’s external liabilities in the form of currency and deposits also decreased at the same time.

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