Rise in current account surplus

Germany’s current account recorded a surplus of €28.1 billion in September 2023, up €5.3 billion on the previous month’s level. This was attributable to a larger surplus in the goods account and in the invisible current transactions balance comprising services as well as primary and secondary income.

The surplus in the goods account grew by €2.1 billion to €22.5 billion because receipts recorded a steeper increase than expenditure. 

The surplus in invisible current transactions expanded by €3.2 billion to €5.6 billion. The crucial factor here was a €4.3 billion decrease in the services account deficit to €6.1 billion. Receipts were up overall, largely owing to higher receipts from charges for the use of intellectual property and other business services. In addition, expenditure fell, with lower travel expenditure playing a significant role. Moreover, the deficit in the secondary income account narrowed slightly by €0.5 billion to €4.0 billion. Expenditure rose slightly, with higher general government payments to the EU budget in connection with financing related to gross national income making a contribution. However, the increase in receipts was stronger, especially on account of an upturn in general government revenue from current taxes on income and wealth. By contrast, net receipts in primary income fell by €1.6 billion to €15.8 billion owing to a decline in total revenue. Residents’ receipts from direct investment and dividends on portfolio investment rose; however, the decline in revenue from investment fund shares was stronger. 

Portfolio investment sees net capital imports

In September, the international financial markets were shaped by the monetary policy decisions of key central banks. At the same time, different economic outlooks in the United States and Europe influenced the setting. Germany’s cross-border portfolio investment recorded net capital imports of €16.6 billion (after €7.6 billion in August), with non-resident investors increasing their holdings of German securities by €19.8 billion net. On balance, they added public and private sector bonds worth €30.3 billion to their portfolios. In all other asset classes, however, they sold German securities, reducing their net holdings of money market paper (€8.6 billion), shares (€1.1 billion) and mutual fund shares (€0.8 billion). Conversely, German investors acquired €3.2 billion net worth of foreign securities. On balance, they mainly purchased mutual fund shares (€3.6 billion) and, to a lesser extent, long-term debt securities (€0.2 billion). However, they parted with foreign shares (€0.6 billion).

In September, transactions in financial derivatives resulted in net outflows of €2 billion (after outflows of €12.3 billion in August). 

Direct investment generated net capital exports of €17.3 billion in September (following modest net capital imports of €0.3 billion in August). German enterprises invested €21.7 billion in affiliated enterprises abroad on balance, providing equity capital (€11.9 billion) as well as additional intragroup loans (€9.8 billion). In September, foreign enterprises boosted their direct investment funds in Germany by €4.4 billion. They provided these affiliated enterprises with roughly equal amounts in the form of equity capital (€2.3 billion) and intra-group lending (€2.1 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 €20.5 billion in September (following €27.3 billion in August). The net capital exports were the result of transactions by enterprises and individuals (€33.4 billion) and monetary financial institutions excluding the Bundesbank (€25.7 billion). The Bundesbank’s net claims on non-residents went down by €36.1 billion. This was due to a decline of €8.4 billion in TARGET claims on the ECB and an increase in the Bundesbank’s liabilities as a result of higher deposits from foreign counterparties. Cross-border transactions by general government generated net capital imports (€2.6 billion).

The Bundesbank’s reserve assets fell – at transaction values – by €0.6 billion in September.