Steep rise in current account surplus

Germany’s current account recorded a surplus of €30.8 billion in November 2023, up €10.8 billion on the previous month’s level. This was primarily caused by the shift into a surplus in invisible current transactions, which comprise services as well as primary and secondary income. Moreover, the surplus in the goods account increased. 

In November, the surplus in the goods account grew by €2.7 billion to €24.4 billion because receipts recorded a stronger increase than expenditure.

Invisible current transactions shifted from a deficit of €1.7 billion in October back into a surplus, which amounted to €6.4 billion. The crucial factor was that the deficit in the services account contracted by €6.5 billion to €3.0 billion. The seasonal decline in travel expenditure played the key role here. Furthermore, net receipts in primary income expanded by €1.3 billion to €15.3 billion. Revenue increased here, mainly as a result of residents’ higher receipts from portfolio investment and other investment income. In addition, expenditure fell slightly, with lower payments of other investment income to non-residents making a contribution. The deficit in secondary income remained virtually unchanged at €5.9 billion, compared with €6.2 billion the previous month. 

Portfolio investment sees net capital exports

In November, the international financial markets were influenced by the diverging economic outlooks in the United States and Europe. Germany’s cross-border portfolio investment recorded net capital exports of €6.8 billion (after €8.5 billion in October). The crucial factor here was that German investors stepped up their holdings of foreign securities more sharply than non-resident investors their holdings of German paper. German investors added foreign securities worth €13.0 billion to their portfolios on balance. They mainly acquired foreign bonds (€8.4 billion), mutual fund shares (€3.5 billion) and money market paper (€1.3 billion). By contrast, they disposed of a small volume of shares (€0.2 billion). Foreign investors increased their holdings of German securities by €6.1 billion, primarily purchasing German money market paper (€4.0 billion), bonds (€2.2 billion) and shares (€1.1 billion). On the other hand, they divested themselves of German mutual fund shares (€1.1 billion). 

In November, transactions in financial derivatives resulted in net inflows of €1.0 billion (after outflows of €5.1 billion in October). 

Direct investment generated net capital exports of €26.4 billion in November, having been broadly balanced in October. This was the result of a marked rise of €24.4 billion in German foreign direct investment. German enterprises provided their foreign affiliates with €12.5 billion of additional funds through intra-group lending. In addition, they boosted their equity capital by €12.0 billion. Foreign enterprises withdrew direct investment to the tune of €2.0 billion from Germany in November, doing so exclusively through internal credit transactions (€2.6 billion). On the other hand, they provided German enterprises with €0.6 billion net in additional equity capital. 

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 €16.9 billion in November (following €1.2 billion in October). The net claims of monetary financial institutions (excluding the Bundesbank) on non-residents went up by €20.6 billion. The Bundesbank saw net capital imports of €1.2 billion. Here, the slight increase in the TARGET balance (€1.1 billion) was countered by higher deposits from non-residents, especially investors outside the euro area. Transactions in the other sectors also resulted in net capital imports in November: these amounted to €2.3 billion for enterprises and households and €0.2 billion for general government.

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