At year-end 2023, Germany’s primary outward foreign direct investment (FDI) stocks were up only marginally on the end of 2022 in net terms, rising from €1,694 billion to €1,701 billion. In particular, the appreciation of the euro – coupled with corresponding negative exchange rate effects – played a part in dampening the small increase in stocks. As in the previous years, equity capital accounted for the bulk of Germany’s primary outward FDI, at €1,851 billion. German investors’ foreign credit positions reduced the direct investment stocks by €150 billion on balance, as claims of €433 billion were outweighed by liabilities of €583 billion. 

A better view of the countries and economic sectors that are actually targeted by the FDI can be obtained by looking through foreign holding companies in the ownership chain. In this consolidated view, outward German FDI amounted to €1,618 billion. A regional breakdown shows that half of Germany’s total outward FDI (€814 billion) remained in Europe, with €618 billion of that amount being attributable to EU countries. America followed in second place, at €530 billion, or one-third of stocks. At €235 billion, Asia was a distant third, with only 15% of German outward FDI.

Across all target countries, consolidated German outward FDI was directed primarily towards manufacturing (€555 billion) and financial and insurance activities (€427 billion). This contrasts with an analysis in terms of primary FDI, where the bulk (61%) was accounted for by holding companies (€1,040 billion), a perspective which obscures the actual purpose of the FDI.

Primary inward FDI in Germany was up significantly on the end of 2022, increasing by 7% from €953 billion to a new level of €1,020 billion. Equity capital was the main driver of growth here, expanding by around €64 billion to an aggregate level of €813 billion. Foreign loans accounted for a net €207 billion of total stocks.

Holding companies were responsible for 65% (€666 billion) of inward FDI stocks overall. Here again, the consolidated data provide a better view of the domestic economic sectors that were actually targeted by the FDI. Out of the €726 billion in primary and secondary inward FDI in Germany, €263 billion was accounted for by the financial and insurance activities sector and €163 billion by the manufacturing sector.

The regional breakdown looks much the same as it does for Germany’s outward FDI, though the share of European countries is even more significant here, accounting for €554 billion and thus 76% of total stocks. The EU was responsible for €432 billion of this amount. Americas’ stocks of FDI in Germany amounted to €106 billion, or 15% of the aggregate. Asia ranked third here as well, accounting for 8% of FDI, equal to stocks of €60 billion.

Tracing the ownership chain to its source and thus to the economy of the ultimate controlling parent (UCP), the ultimate investing economies (UIEs) shift – markedly in some cases – in terms of their importance for inward FDI in Germany. Viewed from this perspective, the United States ranked as the most important UIE, at €164 billion, while stocks from the Netherlands and Luxembourg – traditional holding locations that are mainly used as “pass-through” countries for capital – more than halved.