German Trade Surplus to Shrink Rebalancing Economy, OECD Says

Germany’s current-account surplus will shrink through 2015 as the economy undergoes “some welcome rebalancing” in favor of domestic demand, the Organization for Economic Cooperation and Development said.

The surplus will narrow from 7 percent of gross domestic product to 6.1 percent next year and 5.6 percent in 2015, the Paris-based organization said today in its semi-annual Economic Outlook report. Economic growth will accelerate from 0.5 percent this year to 1.7 percent in 2014 and 2 percent in 2015, while the number of job seekers will decline, it said.

“Collective bargaining agreements indicate that wage growth will strengthen under pressure from low unemployment and skills shortages,” the OECD said. “Monetary conditions will remain expansionary, boosting private sector investment spending.”

The OECD’s findings are a fillip to Chancellor Angela Merkel after her government’s economic policy was reprimanded by the European Union, the U.S. and the International Monetary Fund, all of which criticized Germany for running a trade surplus.

More needs to be done, according to the OECD. “Structural reforms to deregulate professional services, remove barriers to full-time female employment and further improve access to tertiary education would all strengthen growth and contribute to global rebalancing,” it said.

Germany’s current-account surplus has exceeded the EU’s 6 percent threshold every year since 2007 and may put upward pressure on the euro, possibly hampering the recovery of struggling euro-area nations, according to the European Commission, which has started an in-depth review on the matter.

The commission called on Germany and other countries with trade surpluses, such as the Netherlands, to boost investment and possibly reduce savings rates. The U.S. Treasury blamed German surpluses for draining European and global growth, while the IMF reprimanded Germany for its imbalances, urging Merkel to curtail the trade surplus to an “appropriate rate.”

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