Steep rise in current account surplus

Germany’s current account recorded a surplus of €16.9 billion in November 2022, up €11.2 billion on the previous month’s level. This was caused by the larger surplus in the goods account and the shift to a surplus in invisible current transactions, which comprise services as well as primary and secondary income.

In November, the surplus in the goods account grew by €6.8 billion on the month to €13.1 billion because receipts recorded a much steeper increase than expenditure.

Invisible current transactions shifted from a deficit of €0.6 billion in October to a surplus of €3.8 billion. This was mainly due to the deficit in the services account narrowing by €4.9 billion to €2.0 billion, with the seasonal reduction in travel expenditure playing a key role. In addition, net receipts from primary income rose slightly by €0.7 billion to €12.3 billion, mainly owing to residents’ higher income from portfolio investment abroad. By contrast, the deficit in the secondary income account widened by €1.2 billion to €6.5 billion, with a considerable contribution to this coming from higher general government payments to the EU budget in connection with financing related to gross national income.

Portfolio investment sees net capital imports

In November 2022, financial markets were characterised by somewhat diminishing downside risks to economic activity amid persistently high inflation. Germany’s cross-border portfolio investment generated net capital imports of €31.6 billion (October: net capital exports of €7.4 billion). Foreign investors increased their holdings of German securities by €33.1 billion, mainly acquiring bonds (€21.8 billion), money market paper (€9.8 billion) and shares (€1.9 billion). By contrast, they sold mutual fund shares of German enterprises to the tune of €0.4 billion. For their part, resident investors barely purchased foreign securities (€1.5 billion) on balance, adding mutual fund shares (€3.7 billion) and money market paper (€1.4 billion) to their portfolios, whilst offloading shares (€3.4 billion) and bonds (€0.2 billion).

In November, transactions in financial derivatives recorded outflows of €1.4 billion (October: €5.9 billion).

Direct investment generated net capital imports of €15.2 billion in November (October: net capital exports of €11.2 billion). Foreign enterprises boosted their direct investment funds in Germany by €14.3 billion. They mainly topped up their cross-border loans (€12.6 billion), predominantly through financial loans. In addition, foreign companies provided their affiliates in Germany with equity capital (€1.7 billion), with reinvested earnings accounting for more than half of this amount. Conversely, German enterprises scaled back their foreign direct investment by €0.9 billion. They reduced the volume of loans issued to foreign enterprises (€7.2 billion), doing so exclusively by granting fewer financial loans. By contrast, they stepped up their equity capital in affiliates abroad by €6.3 billion, with reinvested earnings playing an important role here, too.

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 amounting to €38.5 billion in November (following net capital imports of €1.6 billion in October). All sectors contributed to this development. The net claims of monetary financial institutions excluding the Bundesbank went up (€20.5 billion), as did those of enterprises and households (€13.4 billion), the Bundesbank (€3.9 billion) and, to a lesser extent, general government (€0.6 billion). The Bundesbank’s TARGET2 claims grew by €4.0 billion.

The Bundesbank’s reserve assets grew – at transaction values – by €0.4 billion in November.