International investment position
Recovery made from coronavirus-related slump at year-end: on balance, Germany’s net international investment position (i.i.p.) at end-2020 reached a new record high of €2.5 trillion or 76.3% of gross domestic product (GDP), thereby recovering from its coronavirus-related slump in the second quarter, albeit with relatively low annual growth of €64 billion – on an average of the past five years, growth amounted to €257 billion.
This increase was associated with strong rises in gross figures, which feed off high financial account transactions as well as high positive valuation effects on both sides of the i.i.p. Germany’s external assets increased by 8.5% over the course of the year and now total in excess of €10 trillion. This reflects, amongst other things, the sharp rise in the Bundesbank’s TARGET2 claims. External liabilities, too, expanded by a substantial 10.5% to just under €8 trillion. Germany’s external assets and liabilities thus currently add up to five-and-a-half times its GDP. This ratio, which is also used to describe an economy’s financial openness, has therefore reached a new record high.