Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
Real-time insight on key fixed income and fx markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
- Political RiskPolitical Risk
Intelligence on key political and geopolitical events around the world.
- About Us
--Despite International Concerns, Berlin Unworried By Exporter Success
--Surplus Likely To Ease Over Coming Years As MonPol 'Stabilises'
By Jean Comte
BRUSSELS (MNI) - As the German electoral campaign enters the final month,
Brussels observers note that one topic is totally absent from the debate: the
excessively large German current account surplus.
"There is no debate at all on this issue, the big political parties don't
discuss it," Guntram Wolff, director of the Brussels-based Bruegel think-tank,
told Market News International. "Among German society, there is no concern
regarding the surplus," stressed Gabriel Felbermayr, Director of the
Munich-based ifo Center for International Economics.
German companies are indeed happy with their position as exporters and
politicians tend to display the surplus as a proof of the success of their
national economic model.
Germany's current account balance, which peaked at E21bn in June, has been
qualified as excessive by the EU Commission, the IMF, and the OECD. It came
under renewed pressure last Spring, when French President Emmanuel Macron and
U.S. President Donald Trump said the surplus was harmful to their countries --
comments seen as unwelcome on the German political scene.
"We don't need to feel ashamed of being successful. Our exports are the
result of good work done here in the country," said Martin Schulz, former
President of the European Parliament and now leader of the centre-left SPD.
Germany's surplus hit 8.3% of the GDP in 2016, having grown continuously
from a deficit of 1.7 in 2000.
In 2011, it exceeded the the threshold of 6%, becoming 'excessive' under EU
rules on macroeconomic imbalances. But no formal procedure has been triggered
against Berlin. "It is sensitive," stressed one source.
EU officials told MNI that the issue is discussed from time to time among
Brussels-based national delegations. According to one official, the discussion
usually derives toward the lack of investment in Germany -- one of the key
reason for such a high surplus. But it gets stuck when the German representative
highlights that savings are essential, in view of the ageing German population.
Economists such as Ifo's Felbermayr also propose fighting the imbalance by
increasing consumption -- something that would automatically boost imports. He
suggests domestic measures such as reducing VAT or increasing the minimum wage
In its last economic forecasts, published in the Spring, the EU Commission
nevertheless stated that "the widening of Germany's current account surplus came
to a halt", and the the current account balance "should start to gradually
decline relative to GDP."
"I expect a market-driven adjustment in the next 3 or 4 years," Bruegel's
Wolff told MNI, pointing to the need for higher wages and investment in
companies' capital, but also to the upcoming monetary stabilisation.
"It will not erase the surplus, but it can bring it to a more natural level
-- something like 3 or 4%," he concluded.
--MNI London Bureau; tel: +44 203-586-2225; email: email@example.com