Rise in current account surplus

Germany’s current account recorded a surplus of €19.6 billion in September 2021, up €4.2 billion on the previous month’s level. The result was primarily driven by an increased goods account surplus and was also attributable to a somewhat higher surplus in invisible current transactions, which comprise services as well as primary and secondary income.

In September, the surplus in the goods account increased by €3.9 billion on the month to €16.0 billion, with exports of goods expanding more sharply than imports.

The surplus in invisible current transactions rose by €0.3 billion to €3.6 billion in September. The decrease in the services account’s deficit slightly outpaced the increase in the deficit recorded in secondary income: the deficit in the services account narrowed by €2.6 billion to €1.9 billion. Receipts in this account grew, which was primarily attributable to increases in other business services and charges for the use of intellectual property. Lower expenditure on financial services in particular, as well as lower travel expenditure, contributed to the slight drop in expenditure. The deficit in the secondary income account widened by €2.4 billion to stand at €4.9 billion. The reduction in general government revenue on current transfers relating to international cooperation played a key role in this regard. Net receipts in the primary income balance remained broadly unchanged at €10.4 billion.

Portfolio investment sees outflows

In September 2021, international financial markets were influenced by rising inflation rates and speculation regarding the future orientation of monetary policy, especially in the United States. It was against this backdrop that Germany’s cross-border portfolio investment recorded net capital exports of €34.9 billion (after net capital imports of €6.7 billion in August). Domestic investors added, on balance, €24.7 billion worth of securities issued by non-residents to their portfolios, purchasing mutual fund shares (€8.3 billion), shares (€8.0 billion), bonds (€5.7 billion) and money market paper (€2.7 billion). Foreign investors disposed of German securities to the tune of €10.1 billion net, selling bonds (€9.8 billion) and shares (€1.6 billion), but acquiring money market paper (€1.1 billion) and – to a lesser extent – mutual fund shares (€0.1 billion). Part of the sales of debt securities was directly triggered by the Eurosystem’s asset purchase programmes.

In September, the balance of financial derivatives recorded net inflows (€6.9 billion). 

Direct investment recorded net capital exports of €8.0 billion in September (August: €3.7 billion). Domestic enterprises increased their foreign direct investment by €26.2 billion. They boosted their equity capital in non-resident enterprises by €8.9 billion, of which around half was through reinvested earnings. They provided an additional €17.3 billion via intra-group lending. Non-resident firms injected their affiliated enterprises in Germany with direct investment funds worth €18.2 billion, chiefly in the form of loans (€17.4 billion). They raised their equity capital only slightly by €0.8 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 amounting to €41.2 billion in September (following €14.2 billion in August). Monetary financial institutions (excluding the Bundesbank) recorded inflows of €54.0 billion from abroad. By contrast, the Bundesbank recorded net capital exports in other investment (€31.1 billion). This was primarily due to a rise in TARGET2 claims vis-à-vis the ECB (€77.9 billion), which was only partially offset by higher deposits from non-euro area residents. Net capital imports were generated by cross-border transactions conducted by enterprises and households (€14.5 billion) and general government (€3.8 billion).

The Bundesbank’s reserve assets fell slightly – at transaction values – by €0.2 billion in September.