Current account surplus down

Germany’s current account recorded a surplus of €18.5 billion in May 2024, down €6.6 billion on the previous month’s level. The goods account surplus increased slightly, but the deficit in invisible current transactions widened to a far greater extent. 

The surplus in the goods account grew by €0.7 billion to €26.2 billion in May because expenditure declined more sharply than receipts. The slight deficit in invisible current transactions in April widened significantly from €0.4 billion to €7.7 billion. This was mainly due to lower net receipts in primary income, which were driven, in particular, by the rise in dividend payments to non-residents for portfolio investment, as is typical for May. There was also a larger deficit in the services account (€8.1 billion, following €5.6 billion in April). Total receipts for this account decreased in May, primarily owing to lower receipts from charges for the use of intellectual property and other business services. In addition, expenditure increased, chiefly as a result of the usual seasonal increase in travel expenditure. Meanwhile, the deficit in the secondary income account virtually halved to €1.5 billion. One factor in particular contributing to this decrease was higher general government tax revenue from non-residents owing to the higher dividend payments for portfolio investment.

Portfolio investment sees net capital exports

Germany’s cross-border portfolio investment recorded net capital exports of €7.5 billion in May, after net capital imports of €0.4 billion in April. Domestic investors purchased foreign securities worth €16.6 billion net. They added mutual fund shares (€7.9 billion), bonds (€6.8 billion) and shares (€4.4 billion) to their portfolios, while selling foreign money market paper (€2.5 billion). Foreign investors acquired German securities worth €9.1 billion net, with bonds (€12.6 billion), especially public bonds, making up the lion’s share. They also purchased a small volume of shares (€0.1 billion). By contrast, they disposed of money market paper (€3.2 billion) and mutual fund shares (€0.4 billion) on balance. 

In May, transactions in financial derivatives resulted in net inflows of €0.1 billion (after outflows of €5.3 billion in April). 

Direct investment generated net capital exports of €3.3 billion in May (April: €6.1 billion). Viewed in terms of transactions, German foreign direct investment rose by €2.4 billion. German enterprises increased their equity capital abroad by €5.6 billion. On balance, inflows of funds predominated in intra-group lending (€3.3 billion). Although German group entities provided affiliated enterprises abroad with additional financial credits (€3.1 billion), trade credits were mainly redeemed (€6.4 billion). Foreign enterprises reduced their direct investment in Germany by €1.0 billion. They increased their net volume of intra-group loans (€1.4 billion), but scaled back their equity capital (€2.3 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 capital exports on balance amounting to €8.8 billion in May (April: net capital imports of €4.1 billion). Higher net claims of monetary financial institutions (€21.3 billion) made a notable contribution to this amount. The Bundesbank’s net claims also grew by €4.0 billion, with TARGET2 claims on the ECB rising by €13.2 billion. However, the Bundesbank’s liabilities in the form of cash and foreign deposits also increased at the same time. Enterprises and households recorded net capital imports of €16.0 billion in May. Transactions by general government resulted in a small volume of net capital imports as well (€0.5 billion).

The Bundesbank’s reserve assets grew – at transaction values – by €0.2 billion in May.