Germany to run world’s largest current account surplus in 2019 – Ifo

09/13/2019

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Rene Wagner, Thomas Seythal,and Paul Carrel | Reuters

BERLIN, Sept 13 (Reuters) – Germany will run the world’s largest current account surplus in 2019 for the fourth consecutive year, the Ifo economic institute said on Friday, likely putting further pressure on Berlin to help reduce global imbalances and stimulate domestic demand.

This year’s surplus in the current account — which measures the flow of goods, services and investments — is seen at $276 billion, Ifo economist Christian Grimme told Reuters.

He added that Japan’s surplus is projected to come in at $188 billion, followed by China with $182 billion.

In contrast, the United States is expected to post a current account deficit of $480 billion, the world’s largest, despite President Donald Trump’s trade war with China and additional tariffs imposed on products imposed on Chinese products.

Germany’s current account surplus can mainly be attributed to the fact that far more German products and services are sold overseas than imported to Europe’s largest economy.

The trade imbalances have stirred the wrath of Trump, who has threatened to impose additional tariffs on German carmakers. The European Union’s executive body and the International Monetary Fund have also criticised Germany’s surplus.

The European Commission considers a current account surplus of 6% as sustainable over the long-term when measured by the size of a country’s economy.

Germany has come closer to that threshold. While the country reached a record high of 8.5% in 2015, Ifo is now projecting 7.1% this year.

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