German balance of payments in May 2022

Current account surplus down sharply

Germany’s current account recorded a surplus of €2.5 billion in May 2022, down €6.4 billion on the previous month’s level. Although the surplus in the goods account increased, this was outweighed by the sharp shift into a deficit for invisible current transactions, which comprise services as well as primary and secondary income.

In May, the surplus in the goods account grew by €1.9 billion on the month to €6.2 billion, but this was due to the rise in net goods exports in merchanting trade and the decline in net imports of non-monetary gold. In foreign trade, however, imports increased somewhat more strongly than exports.

Invisible current transactions shifted from a surplus of €4.6 billion in April to a deficit of €3.7 billion in May. This was primarily attributable to the decline in net receipts in primary income by €8.3 billion to €2.2 billion, with higher dividend payments to non-residents from portfolio investment playing a key role. Furthermore, the deficit in the services account widened by €1.5 billion to €2.7 billion. Expenditure expanded more strongly than receipts, especially as travel expenditure picked up as is usual at this time of year. By contrast, the deficit in the secondary income account narrowed by €1.5 billion to €3.2 billion. Higher general government tax revenue from non-residents owing to the higher dividend payments on portfolio investments in particular contributed to this decrease.

Portfolio investment sees net capital exports

In May 2022, as in previous months, financial markets continued to be influenced by Russia’s invasion of Ukraine and rising inflation rates. Germany’s cross-border portfolio investment generated net capital exports of €6.5 billion (April: €11.1 billion). Domestic investors added €2.9 billion worth of securities issued by non-residents to their portfolios on balance. They purchased foreign bonds (€5.5 billion), shares (€1.5 billion) and mutual fund shares (€0.7 billion), while disposing of foreign money market paper (€4.7 billion). Non-resident investors offloaded German securities to the tune of €3.6 billion net, selling money market paper (€7.1 billion) and shares (€0.7 billion), whilst acquiring German bonds (€3.6 billion) and mutual fund shares (€0.6 billion).

In May, transactions in financial derivatives recorded net outflows (€0.5 billion).

Direct investment generated net capital exports of €19.7 billion in the reporting month (April: €12.8 billion). Domestic enterprises injected their affiliates abroad with direct investment funds totalling €10.9 billion, boosting their equity capital by €11.6 billion. By contrast, repayments predominated in lending to affiliates abroad (€0.7 billion). Conversely, non-resident enterprises scaled back their direct investment in Germany by €8.8 billion. Although they too augmented their equity capital (€2.0 billion), the volume of intra-group loans issued to business units in Germany from abroad fell significantly by €10.8 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 inflows of capital amounting to €21.4 billion in May (following €26.8 billion in April). Monetary financial institutions (excluding the Bundesbank) recorded net capital imports (€18.3 billion). A decline in the net external position in other investment was also registered for enterprises and households (€8.6 billion) as well as general government (€3.7 billion). By contrast, the Bundesbank’s net external claims went up by €9.2 billion. Its TARGET2 claims rose by €24.3 billion. At the same time, the Bundesbank’s external liabilities also increased significantly, as non-euro area residents topped up their deposits with the Bundesbank.

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