Rise in current account surplus

Germany’s current account posted a surplus of € 23.2 billion in June 2024, up € 4.9 billion on the previous month’s level. The goods account surplus decreased, yet the deficit in invisible current transactions narrowed to a far greater extent.

In the reporting month, the surplus on the goods account decreased by € 2.4 billion to € 24.0 billion because receipts fell and expenditure rose. The deficit in invisible current transactions contracted by € 7.2 billion to € 0.7 billion, largely because net receipts in primary income grew by € 8.4 billion to € 10.1 billion. The main reason for this was the countermovement in dividend payments to non-residents from portfolio investment; these payments rose considerably in the previous month, as is usual in May. In addition, the deficit on the services account narrowed by € 1.9 billion to € 6.4 billion. Expenditure rose, partly because travel expenditure rose. However, receipts increased more strongly, mainly due to higher revenues from computer and other business services. In addition, travel receipts rose markedly; this is likely to have been due in part to the European Football Championship in Germany, part of which took place in this reporting month. By contrast, the deficit on the secondary income account widened by € 3.0 billion to € 4.4 billion. One factor at play here was that the decline in dividend payments to non-residents from their portfolio investment also reduced government tax revenue.

Portfolio investment sees net capital imports

Germany’s cross-border portfolio investment recorded net capital imports of € 9.7 billion in June, after net capital exports of € 8.3 billion in May. Foreign investors acquired German securities worth € 31.7 billion net. On balance, they added bonds to their portfolios, in particular (€ 16.8 billion), with demand split evenly between instruments issued by the public and private sectors. They bought € 13.4 billion net worth of money market paper. In addition, non-residents acquired a small volume of shares (€ 0.9 billion) and mutual fund shares (€ 0.5 billion). Domestic investors purchased foreign securities worth € 22.0 billion net. Their acquisitions comprised bonds (€ 12.0 billion), mutual fund shares (€ 8.5 billion) and foreign money market paper (€ 2.2 billion). On the other hand, they sold off foreign shares (€ 0.8 billion).

In June, transactions in financial derivatives resulted in net outflows of € 5.0 billion (following € 0.1 billion in May).

Direct investment generated net capital exports of € 3.9 billion in June (May: € 0.6 billion). Viewed in terms of transactions, German foreign direct investment rose by € 14.1 billion. German enterprises increased their equity capital abroad by € 8.7 billion. Additionally, German group entities provided affiliated enterprises abroad with additional lending (€ 5.3 billion), which consisted almost entirely of trade credits. Foreign enterprises boosted their direct investment funds in Germany by € 10.2 billion. They increased their net volume of intra-group loans (€ 10.0 billion) and also, to a small extent, their equity capital (€ 0.2 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 € 10.7 billion in June (following € 14.7 billion in May). The Bundesbank’s higher net claims – these rose by € 26.2 billion – made a notable contribution to this amount. The Bundesbank’s TARGET claims on the ECB increased by € 29.3 billion. However, the Bundesbank’s external liabilities in the form of currency and deposits also increased at the same time. Enterprises and households (€ 9.4 billion) and general government (€ 0.6 billion) likewise recorded net capital exports in June. By contrast, monetary financial institutions’ liabilities rose by € 25.5 billion on balance.

The Bundesbank’s reserve assets rose – at transaction values – by € 0.9 billion in June.