Current account surplus down

Germany’s current account recorded a surplus of €29.7 billion in January 2024, down €1.9 billion on the previous month’s level. The goods account surplus increased significantly, but this was outweighed by a stronger decline in the surplus in invisible current transactions, which comprise services as well as primary and secondary income.

January saw the surplus in the goods account grow by €8.2 billion to €25.7 billion because receipts recorded a steeper increase than expenditure.

The surplus in invisible current transactions contracted by €10.1 billion to €4.0 billion, mainly on account of declining net receipts in primary income, which fell by €7.6 billion to €12.5 billion. Lower revenue following payment of the EU’s agricultural subsidies to Germany in December 2023 was a notable factor in this decrease. Furthermore, there was a drop in receipts from investment income. In addition, the month under review saw what had been a slim services account surplus (€0.3 billion) shift back to a deficit, which amounted to €4.1 billion. This mainly came about because net receipts in other business services and in telecommunication, computer and information services reverted to net expenditure and an increase in net travel expenditure was recorded. By contrast, the deficit in the secondary income account narrowed by €1.9 billion to €4.3 billion, primarily due to declining general government expenditure on current transfers relating to international cooperation on balance.

Portfolio investment sees net capital imports

In January, activity in global financial markets was shaped by confidence among market players that inflation could recede further in major currency areas. Germany’s cross-border portfolio investment recorded net capital imports of €2.0 billion, after net capital exports of €17.6 billion in December. This was mainly because non-resident investors added somewhat more to their holdings of German securities than domestic investors did to their holdings of foreign securities. Non-resident investors added German securities worth €22.5 billion net to their portfolios, purchasing both private and public bonds on a larger scale (€42.1 billion) while offloading net holdings of money market paper (€17.4 billion), shares (€1.9 billion) and mutual fund shares (€0.3 billion). German investors, meanwhile, added €20.5 billion worth of securities issued by non-residents to their portfolios on balance, investing in mutual fund shares (€12.2 billion) as well as money market paper (€4.3 billion) and bonds (€4.0 billion) but, at the same time, disposing of a small volume of foreign shares (€0.1 billion).

In January, transactions in financial derivatives resulted in net inflows of €2.9 billion, down from €3.9 billion in December. 

Direct investment recorded net capital imports of €0.2 billion in January (December: net capital exports of €2.6 billion). Foreign enterprises provided their German affiliates with additional direct investment funds (€2.4 billion), boosting their equity capital (€7.6 billion) and reducing the volume of loans (€5.2 billion). Viewed in terms of transactions, German foreign direct investment rose by €2.2 billion. German enterprises likewise stepped up their equity capital abroad, recording an increase of €11.0 billion. By contrast, redemptions predominated in intra-group lending (€8.8 billion); this mainly concerned trade credits.

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 €8.4 billion in January (December: €19.4 billion), with the Bundesbank’s higher net claims (€52.3 billion) making a notable contribution to this amount. The Bundesbank’s claims on the ECB from TARGET balances decreased significantly (€51.5 billion) after rising in December. However, the Bundesbank’s liabilities fell more sharply still – especially its liabilities to non-euro area investors. This pattern reflects the fact that non-residents often temporarily increase their deposits with the Bundesbank at the end of one year and then reduce them again at the beginning of the next year. Monetary financial institutions excluding the Bundesbank recorded net capital imports of €28.2 billion in January in the other investment account. Transactions by enterprises and households led to net capital imports as well (€15.9 billion). Net capital exports were recorded in January for general government (€0.2 billion).

The Bundesbank’s reserve assets declined – at transaction values – by €0.2 billion in January.