Growing trade surplus ignites feud over Germany’s exports

Julian Harris
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THE ROW over the size of Germany’s trade surplus was stoked yesterday by data that showed its exports rising for a fourth straight month.

The release coincided with a visit to Berlin by US Treasury secretary Jack Lew who has said that the German government should be doing more to stimulate domestic demand.

Germany’s current account balance – a measure that also includes investment and cash flows – is consistently in surplus, with some critics arguing this has caused an imbalance that is harmful to the euro area.

The European Union admitted in November that it is looking into the surplus. If it finds a problem, it can make recommendations to the German authorities which, if ignored, could result in a fine of around €2.5bn (£2.07bn).

Lew met with German finance minister Wolfgang Schauble yesterday, reiterating his view that its new coalition government should boost spending.

Yet Schauble insists the surplus is not a problem: “The Eurozone as a whole has a very small surplus. And without the German surplus toward third countries, the Eurozone would have no surplus at all, but a deficit,” he said.

German exports to fellow Eurozone states – a suggested cause of the problem – were up just 0.1 per cent in November compared to a year earlier, while exports to EU states not in the Eurozone were up 4.9 per cent. Total German exports, seasonally-adjusted, were up 0.3 per cent in November compared to October. Its surplus was €17.8bn, when seasonally-adjusted.