Very sharp rise in current account surplus

Germany’s current account posted a surplus of €29.6 billion in June 2023, up €21.4 billion on the previous month’s level. This was because invisible current transactions, which comprise services as well as primary and secondary income, switched to a surplus, and there was a larger surplus on the goods account.

The surplus on the goods account expanded by €8.5 billion to €24.3 billion, as receipts recorded a steep increase and expenditure fell slightly. 

Invisible current transactions shifted from a deficit of €7.6 billion in May back into a surplus in June, which came to €5.3 billion. The main reason for this was that net expenditure on the primary income account in May (amounting to €1.4 billion) reverted to net receipts (totalling €14.4 billion). This development was chiefly attributable to the countermovement in dividend payments to non-residents for portfolio investment, which had risen considerably in the previous month, as is usual in May. In addition, the deficit on the services account narrowed by €1.2 billion to €5.0 billion. Expenditure increased, also owing to the rise in spending for travel typical for this time of year. However, revenue rose even more sharply, due in particular to higher receipts from telecommunications, computer and information services. By contrast, the deficit on the secondary income account widened from €0.1 billion to €4.2 billion. This was mainly attributable to the lower dividend payments made to non-residents from their portfolio investment, which also resulted in decreased general government tax revenue.

Portfolio investment sees net capital exports

Germany’s cross-border portfolio investment recorded net capital exports of €14.3 billion, after net capital imports of €20.9 billion in May. Resident investors increased their holdings of foreign securities by €15.7 billion. They mainly purchased bonds (€19.7 billion), but also acquired money market paper (€0.5 billion) and mutual fund shares (€0.4 billion) on a considerably smaller scale. Meanwhile, they offloaded shares worth €4.9 billion. In the opposite direction, non-resident investors acquired German securities worth €1.4 billion. On balance, they added bonds (€6.2 billion) to their portfolios, but disposed of shares (€2.4 billion), mutual fund shares (€1.3 billion) and money market paper (€1.0 billion).

In June, transactions in financial derivatives resulted in inflows of €3.6 billion (after outflows of €9.6 billion in May). 

Direct investment in June generated net capital exports of €13.9 billion (after net capital imports of €3.7 billion in May). German enterprises increased their direct investment funds abroad by €21.4 billion. They supplied additional funds (€12.6 billion) via intra-group credit transactions. In this context, the volume of trade credits increased somewhat more strongly than that of financial loans. In addition, domestic enterprises stepped up the equity capital in their foreign affiliates (€8.8 billion). In the opposite direction, foreign enterprises also increased their investment in Germany (€7.5 billion). They granted additional intra-group loans (€7.0 billion), predominantly in the form of trade credits. Moreover, non-resident group parents increased their equity capital in domestic enterprises slightly, by €0.5 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 €31.2 billion in June (following €30.5 billion in May). Net external claims of monetary financial institutions excluding the Bundesbank rose by €23.4 billion. The Bundesbank’s net external claims declined by €26.2 billion. This was chiefly attributable to the fact that the Bundesbank’s TARGET claims on the ECB declined by €13.2 billion, whilst at the same time, foreign deposits at the Bundesbank increased, predominantly those from non-euro area residents. Net capital exports were recorded by enterprises and households (€31.4 billion) and general government (€2.7 billion).

The Bundesbank’s reserve assets rose – at transaction values – by €1.0 billion in June