Daily Management Review

Germany’s trade surplus is the largest in the world


01/17/2018


The positive balance of the current account of Germany was the largest in the world in 2017, according to the information of the Munich economic institute Ifo, reports Reuters.



fdecomite via flickr
fdecomite via flickr
The promulgation of this indicator can raise a wave of criticism in relation to economic and fiscal policy in Europe's largest economy.

For many years, the International Monetary Fund (IMF) and the European Commission have called on Germany to increase domestic demand and import volumes to reduce global economic imbalances and to disperse the growth of the world economy.

Ifo said that the current account surplus of Germany, which measures the flow of goods, services and investments, was the largest in the world for the second consecutive year in 2017 and amounted to $ 287 billion; the second place was taken by Japan with $ 203 billion.

President of the United States Donald Trump earlier criticized Germany for the fact that the authorities have done too little to reduce the surplus of their trade balance with the United States.

German Chancellor Angela Merkel denied these attacks, pointing out that personal consumption is becoming a major factor in the growth of the German economy.

Merkel also noted that Germany's trade surplus is mainly a result of the interaction of supply and demand in world markets and that Berlin has a limited impact only on other important factors, such as the euro exchange rate and energy prices.

But Holger Bingmann, President of the German BGA trade association told Reuters that a record surplus should push the world's fourth-largest economy to do more to stimulate imports.

"It is important that we, like Germany, also commit ourselves to promote imports," Bingmann said, defending German quality. "Good products seem to always find a market."

Ifo specialists said that last year China came in third with a surplus of $ 135 billion, less than half of Germany's surplus.

Germany's trade surplus fell to 7.8% of total production in 2017 from 8.3% in the previous year.

"Trade in goods is the main reason for Germany's surplus," said Ifo’s economist Christian Grimm, "The main driver is the strong demand from the European Union and the United States."

source: reuters.com






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