Rehn, O., (2013), “Turning Germany’s surplus into a win-win for the Eurozone”, Olli Rehn’s blog, 11 Νοεμβρίου.
Germany’s current account surplus has been a subject of heated debate for some time. On the one side, there are regular calls for the country to reduce its surplus through fiscal stimulus, to lift southern Europe from its doldrums. On the other side, in Germany these calls are often regarded as jealous attacks against the country’s extraordinary economic performance.
Both extremes bluntly simplify a complex reality in a way that kills any serious policy debate. Especially in the current context of coalition talks in Germany about a new government programme, it is important to look at the matter in an analytical manner to provide substantive elements for a well-informed debate.
Let’s look at the facts and consider what can be done in their light. For several years, Germany has run a sizeable current account surplus. Recent data indicate that the surplus has surpassed 6% of GDP in every year since 2007.
What is behind the large surplus? A key factor has been the deepening of European integration in the past ten years, since this has helped strengthen Germany’s industrial competitiveness in many ways. First, the creation of the euro prevented the German exchange rate from appreciating to reflect the large surplus. Second, the integration of the production chains with central and eastern Europe allowed Germany to diversify and profit from a large pool of well-educated and cheaper labour. And third, financial market integration and interest rate convergence drove international capital flows which mirrored these current account developments.
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Σχετικές Αναρτήσεις
- Cohen-Setton, J., (2013), “Blogs review: The deflationary bias of Germany’s current account”,Bruegel, 06 Νοεμβρίου.
- Marzinotto, B., (2013), “The euro complements Northern European economies more effectively than those in Southern Europe”, Europeans Politics and Policy Blog, 02 Οκτώβριος.
- Delors, J., Vitorino, A. and Bertoncini, Y., (2013), “Germany and the EU: a new cycle?”, EurActiv, 30 Σεπτέμβριος.
- Münchau, W., (2013), “Optimism about an end to the euro crisis is wrong”, The Financial Times, 27 Οκτωβρίου.