Germany's international investment position at the end of 2013
Germany's net external position stood at €1,204 billion at the end of 2013, and thus amounted to almost 43% of gross domestic product. The German net external asset position rose by €251 billion year-on-year. This increase primarily reflects Germany's current account surplus last year. Unlike in previous years, the increase occurred against the backdrop of declining gross amounts outstanding. Claims on non-residents decreased by 5.0% year-on-year to €6,916 billion, while external liabilities were 9.7% lower than the 2012 year-end figure, totalling €5,712 billion at the end of 2013. The decrease on both sides of the international investment position resulted in particular from declining financial derivatives positions and from valuation effects. In addition, a fall in other investment flows between residents and non-residents also reduced claims on and liabilities to non-residents.
The typical deficit in portfolio investment declined from €583 billion to €340 billion last year. At the end of 2013, domestic investors' holdings of foreign securities were 6.9% higher than one year earlier, at €2,236 billion. This increase was distributed across almost all investment classes and was predominantly attributable to the rebound in demand among German investors for foreign securities. The rise in share prices additionally contributed to a valuation-related increase in German claims from equity instruments, while exchange rate effects, falling bond prices and other adjustments had a dampening effect on securities. At €2,576 billion at the end of 2013, foreign investors held around 3.7% fewer German securities in their portfolios than at the end of 2012. On the liabilities side, positive share price developments led to higher valuations for domestic shares held by non-resident investors (+€85 billion in total). Holdings of long-term debt securities by non-residents (€1,774 billion) decreased, by contrast, owing in particular to market price effects and to a lesser extent to exchange rate changes; they remained €163 billion down on the previous year's result. In 2013, with confidence returning, investors with a global focus began to invest more strongly in other countries' bonds again, which meant that Germany's role as a safe haven was no longer as sought after as in the preceding years. Sales of long-dated German government securities to foreign buyers remained positive (€29 billion), but the yield, which increased over the course of the year, put pressure on prices and, on balance, led to the valuation of the government's corresponding external liabilities being cut by almost €62 billion. The German banking sector's liabilities from long-term debt securities fell by €91 billion, with downward valuation effects due to exchange rate changes and falling market prices being additionally reinforced by sales and redemptions. However, when looking at this development it is important to bear in mind that the supply of private bonds in Germany decreased in 2013 and hence fewer securities were available to cover demand from abroad as well.
Cross-border relations between enterprises continued to grow in 2013. German foreign direct investment grew by a total of 3.5% to €1,499 billion despite losses in value caused by exchange rates. German investors increased the equity capital at their foreign branches. Furthermore, the direct investment loans granted exceeded the prior-year figure. Non-resident enterprises stepped up their direct investment in Germany by 3.9% (to €1129 billion). Resident enterprises thus recorded higher liabilities from both equity capital and loans from affiliated enterprises abroad. On balance, Germany's net external assets from direct investment stood at €369 billion at the end of 2013 and were thus up €9 billion on the end of 2012.
In other investment, which includes loans and trade credits (as long as these do not count towards direct investment) as well as currency and deposits, the positive net asset position rose to €1,027 billion; it was therefore €36 billion higher than the prior-year figure. Here, too, liabilities (-14.2%) decreased more strongly than assets (-7.4%). The €146 billion decline in the Bundesbank's asset position had a particular impact on claims on non-residents, which totalled €2,415 billion at the end of 2013. As the balance of payments in the euro-area countries worst affected by the financial and sovereign debt crisis improved, the Bundesbank's TARGET2 balance also declined significantly. In addition, monetary financial institutions' long-term claims on non-residents decreased, as a result of both a reduction in the loans granted to non-residents and a fall in deposits with foreign banks. On the liabilities side, other investment abroad totalling €1,387 billion was recorded at the end of 2013. The year-on-year decline in liabilities was primarily due to scaled back deposits from foreign investors. For German monetary financial institutions, the decrease in foreign deposits (-€154 billion), which were primarily interbank positions, is to be seen partly as a countermovement to the heavy safe haven inflows in the previous year. It is a reflection of the easing in the euro-area financial markets. The decline in non-resident deposits with the Bundesbank (-€49 billion) mainly affected balances temporarily placed with the Bundesbank by other central banks and international organisations.
The Bundesbank's foreign reserves amounted to €144 billion at the end of 2013, putting them €45 billion lower than at the end of 2012. This development was determined by lower valuations made in revaluations at market prices, with the fallen price of gold playing the key role.
Changes in the methodology and classifications of the international investment position and the balance of payments
With the publication of the data for the 2013 reporting period, the German international investment position is presented according to the revised International Monetary Fund (IMF) standard for the first time. The statistics therefore comply with the requirements of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The new methodology and classifications of the international investment position also alter the presentation of the items in the table on the international investment position provided in this press release. Tables accounting for changes in the international investment position are published to supplement this, showing the effect of transactions, exchange rate effects and market price effects, as well as other adjustments on stocks. The data on the balance of payments were first published in line with the requirements of BPM6 for the May 2014 reporting month. The changes to the two accounting systems used for the balance of payments and the international investment position were reported in detail in an article in the Bundesbank’s June 2014 Monthly Report. In addition, in the Monthly Report for October 2014 there will be a detailed description of the quantitative effects on the international investment position from the changeover to BPM6 as well as the new presentation in the integrated international investment position statement.