German balance of payments in February 2021

Rise in current account surplus

The German current account recorded a surplus of €18.8 billion in February 2021, up €1.1 billion from the previous month’s level. While the surplus in invisible current transactions, which comprise services as well as primary and secondary income, saw a decline, the surplus in the goods account rose more strongly.

In February, the surplus in the goods account increased by €4.3 billion on the month to €18.6 billion, with exports of goods expanding more sharply than imports.

In February, the surplus in invisible current transactions fell by €3.2 billion to €0.2 billion. This was primarily because net receipts in primary income decreased by €2.1 billion to €7.7 billion, which was largely attributable to higher dividend payments to non-residents for portfolio investment. Furthermore, the deficit in the secondary income account widened by €1.4 billion to €8.8 billion, a development which was contributed to by higher general government payments to the EU budget in connection with financing related to gross national income. The surplus in the services account rose only slightly by €0.3 billion to €1.2 billion.

Portfolio investment sees outflows

In February 2021, the US economy’s increasingly positive outlook shaped developments in the financial markets, which resulted in higher bond yields chiefly in the United States but also worldwide owing to international linkages between interest rates. It was against this backdrop that Germany’s cross-border portfolio investment recorded net capital exports of €35.6 billion (after €11.5 billion in January). Domestic investors added €29.7 billion worth of securities issued by non-residents to their portfolios. They purchased bonds (€15.3 billion), mutual fund shares (€6.9 billion), shares (€6.5 billion) and money market paper (€1.0 billion). By contrast, non-resident investors offloaded German securities (€5.9 billion). They mainly sold money market paper (€8.9 billion), but also shares (€1.9 billion) and mutual fund shares (€0.7 billion), while purchasing bonds issued by public and private issuers (€5.5 billion in total).

Financial derivatives recorded net capital exports of €7.8 billion in February (January: €5.9 billion). 

Direct investment generated net capital exports of €4.9 billion in February, up from €2.6 billion in January. Domestic enterprises increased their foreign direct investment by €6.7 billion. These investors boosted their equity capital in non-resident subsidiaries by €5.9 billion, with reinvested earnings playing a key role here. In addition, they granted, on balance, €0.8 billion in loans to affiliated enterprises abroad. Foreign direct investment stocks in Germany rose by €1.8 billion as a result of transactions. Non-resident firms provided their subsidiaries in Germany with €1.1 billion on balance via intra-group lending and supplied them with €0.8 billion of 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 inflows amounting to €3.5 billion in February (following outflows totalling €5.3 billion in January). Monetary financial institutions (excluding the Bundesbank) recorded net capital imports (€11.5 billion). By contrast, the Bundesbank registered net capital exports of €9.8 billion: although its TARGET2 claims vis-à-vis the ECB fell by €11.2 billion, the deposits from non-resident counterparties decreased more sharply. While general government saw net inflows worth €10.2 billion from abroad, transactions by enterprises and households led to net outflows of funds (€8.4 billion).

The Bundesbank’s reserve assets grew slightly – at transaction values – by €0.1 billion in February.