International investment position: three-dimensional account system presenting changes in net external assets
Germany’s net international investment position (i.i.p.) rose by €147.5 billion in the second quarter of 2022. The three-dimensional account system analyses change in the net i.i.p. from different perspectives.
In the income account, the current account balance excluding investment income and the capital account balance add up to a negative value. Last time this was the case shortly after the turn of the millennium. The investment income balance remains positive, albeit at a lower level than in the previous quarter on account of seasonal factors.
The instrument account shows an increase for all functional categories. With around two-thirds, the main part is attributable to foreign direct investment. The smallest increase was recorded by portfolio investments, which were particularly affected by the negative market price effects.
The sector account reflects the heterogeneous impact of valuation effects on the individual sectors. In recent quarters, fundamental shifts have been seen in individual sectors: the sector “Non-financial corporations, households and non-profit institutions serving households” is once again expanding, changing from a net debtor vis-à-vis non-residents to a net creditor. Meanwhile, the net creditor position of financial corporations (excluding monetary financial institutions (MFIs)), which had risen steadily for a long time, has declined of late.
The three-dimensional account system analyses changes in the net i.i.p. from a range of perspectives: the income account establishes the link to balance of payments transactions and adds to valuation effects and other adjustments, the instrument account shows how changes in the net i.i.p. are reflected in the various functional categories of financial assets, and the sector account considers the domestic sectors involved.