Decrease in current account surplus

Germany’s current account recorded a surplus of €21.3 billion in November 2020, down €1.6 billion from the previous month’s level. This was primarily attributable to a decrease in the goods account surplus. By contrast, the surplus in invisible current transactions, which comprise services as well as primary and secondary income, expanded only slightly.

In November, the surplus in the goods account fell by €1.8 billion on the month to €18.5 billion, with imports of goods recording a sharper increase than exports.

The surplus on invisible current transactions went up slightly by €0.2 billion in November to €2.7 billion, as the increasing balances of the services account and in primary income more than offset the larger deficit in the secondary income account. In the services account, the deficit of €0.4 billion recorded in October turned into a surplus of €1.9 billion, chiefly owing to the reduction in expenditure linked to pandemic-related lower travel spending by residents. Receipts also declined overall, albeit less sharply, with lower receipts from financial services and travel having a dampening effect in particular. Net receipts on primary income went up by €1.0 billion to €8.2 billion, with a decline in dividend payments to non-residents on portfolio investment playing a major role. The deficit in the secondary income account widened by €3.2 billion to stand at €7.5 billion. This was mainly the result of higher general government payments to the EU budget in connection with financing related to gross national income.  

Portfolio investment sees outflows

In November 2020, there was growing confidence in the international capital markets that the approval of the first vaccines against SARS-CoV-2 would allow the economy to normalise in 2021. In addition, the ultimately clear outcome of the US presidential election reduced political uncertainty. It was against this backdrop that Germany’s cross-border portfolio investment recorded net capital exports of €19.5 billion (after €75.2 billion in October). Domestic investors purchased foreign securities worth €11.1 billion. They purchased shares (€8.7 billion) and mutual fund shares (€7.6 billion), while offloading bonds (€3.4 billion) and money market paper (€1.8 billion). Foreign investors divested themselves of German securities once more, albeit to a lesser extent (€8.4 billion, after €48.7 billion in October). They mainly sold money market paper (€6.5 billion), but also disposed of bonds (€2.5 billion), which affected long-term debt securities issued by the government and commercial banks. Non-residents also sold small amounts of German shares (€0.3 billion), but acquired mutual fund shares (€0.9 billion) on balance.

Financial derivatives recorded net capital exports of €9.0 billion in November (October: €0.8 billion).

Direct investment generated net capital exports of €5.8 billion in November, following €5.3 billion in October. Domestic enterprises increased their foreign direct investment by €35.7 billion. These investors boosted their equity capital in non-resident affiliates by €12.8 billion, with reinvested earnings also playing a role here. In addition, they granted, on balance, €22.9 billion in loans to affiliated enterprises abroad. Foreign direct investment stocks in Germany rose by €29.9 billion as a result of transactions. Foreign enterprises supplied their affiliates in Germany with €9.0 billion of equity capital and provided €20.9 billion on balance via intra-group lending.

Other statistically recorded investment, which comprises loans and trade credits (where these do not constitute direct investment), bank deposits and other investment, registered net inflows amounting to €18.5 billion in November (following €52.3 billion in October). Monetary financial institutions (excluding the Bundesbank) recorded net capital imports of €18.0 billion, while the Bundesbank recorded net capital exports (€10.1 billion). This was chiefly attributable to the €12.9 billion increase in the TARGET2 balance. On balance, further funds flowed to enterprises and households (€7.4 billion) and the government (€3.3 billion).

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