Germany’s export surplus has risen to a record high, adding fuel to an intense political debate on whether the export zeal of Europe’s biggest economy is hampering the recovery of crisis-hit southern eurozone countries.
The German foreign trade balance widened to €20.4bn in September, the federal statics office said, surpassing a previous high set in June 2008, just before the economic crisis struck. In August the trade surplus stood at €13.3bn.
Germany dispatched €54.8bn in goods to other EU member states in September, but received only €48.2bn in return. Compared with a year ago exports to EU countries rose 5.4 per cent and imports rose 2.6 per cent. The US Treasury reignited a longstanding debate this week by castigating Germany for its “anaemic pace of domestic demand growth and dependence on exports”, which it said have “hampered rebalancing at a time when many other euro-area countries have been under severe pressure”.
The International Monetary Fund shares these concerns about Germany’s current account.
However, German politicians and industry remain unmoved, arguing that Germany should not sacrifice its own hard-won competitiveness.
Domestic consumption is increasing, helped by a high level of employment and rising wages, they note.
“A high level of innovation and first class quality, combined with a long-term drive to internationalise sales, this is the foundation on which the success of German industry has been built for years,” Matthias Wissmann, president of the VDA car industry association wrote in Handelsblatt, the business daily, this week. “Does Germany’s export strength hurt our neighbours? The opposite is the case. Germany has become the economic motor of Europe.”
Mario Draghi, ECB president, lent support to this argument on Thursday, telling an economic forum in Hamburg that “weakening the strongest doesn’t make the weaker stronger”.
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