NEW EUROPE: Germany’s Trade And Budget Surplus Continue To Destabilise Eurozone




January 17, 2018 | By: NEONLINE-  

Germany’s twin current account and trade surplus, coupled with underinvestment, and record-high savings continue to destabilize the Eurozone, according to a report published this week by the Munich-based Ifo think tank.

Biggest trade surplus in the world

Ifo’s findings concluded that Berlin’s €234bn trade surplus in 2017 dwarfed Japan’s €166bn.

Despite low unemployment of 3.6%, wage growth in Germany remains moderate, subduing inflation and preventing the rebalancing of the Eurozone’s economy via increased consumption.

European reactions

Pierre Moscovici, the European Commission’s head of Economic and Financial Affairs, has explicitly called on Berlin to address the imbalance, saying Pierre Moscovici, called on Berlin the German government needed to boost domestic consumption and said the size of its surplus is “unhealthy”.

Moscovici has made a case for fiscal stimulus for just under a year, insisting on a German demand-side stimulus that translates to pension and wage rises.

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