EU Probes German Trade Surplus in Push for Broad GrowthIan Wishart
European Union regulators began a probe of Germany’s trade surplus, using enhanced powers over how euro nations manage their economies.
The decision to step up monitoring of imbalances in the German economy follows criticism that the country’s current-account surplus -- which at 7 percent of gross domestic product is the second highest in the euro area -- is limiting exports from other euro countries by adding to the strength of the single currency.
The opening of an in-depth review into the imbalances in Germany’s economy comes after the U.S. Treasury blamed German surpluses for draining European and global growth. The International Monetary Fund also reprimanded Germany for its surpluses, urging German Chancellor Angela Merkel to curtail the trade surplus to an “appropriate rate” to help euro partners cut deficits.
“Crucially, a rise in domestic demand in Germany should help to reduce upward pressure on the euro exchange rate, easing access to global markets for exporters in the periphery,” EU Economic and Monetary Affairs Commissioner Olli Rehn said in a blog post on Nov. 11. “Removing the bottlenecks to domestic demand would contribute to a reduction in Germany’s external trade surplus.”