Germany Must Do More on Imbalances, OECD’s Gurria SaysPatrick Donahue and Jonathan Ferro
Germany must do more to redress euro-area economic imbalances as its trade surplus grows and indebted nations labor to reduce debt in the face of stalling economic growth, the OECD’s chief said in an interview.
Angel Gurria, the secretary-general of the Organization for Economic Cooperation and Development, said Germany is already addressing imbalances by implementing a minimum wage and collective-bargaining agreements. Still, Europe’s largest economy has scope after its current-accounts surplus rose to 7 percent of gross domestic product from 6 percent before the European debt crisis.
“There is now a moment in which a greater contribution by Germany, without losing its discipline, without losing the fundamentals in terms of its investment, could help,” Gurria said in an interview with Bloomberg Television in Berlin today.
As European growth grinds to a halt after emerging from years of debt crisis, indebted nations “have to row twice as hard” to scale back budget deficits and increase competitiveness. German exports rose above 100 billion euros ($129 billion) for the first time in July as the country’s trade surplus climbed to an all-time high.
Chancellor Angela Merkel’s government has come under increasing pressure to step up investment and boost domestic demand. At a European Union summit meeting last week, the German leader signaled some leeway on deficits as she echoed comments by European Central Bank President Mario Draghi that governments need to match central bank stimulus measures.
Gurria said governments in the 28-member EU had little scope to spur growth through monetary or fiscal measures, “because we want to reduce the deficits and accumulated debt.” Instead, policy makers need to “go structural.”
“Structural means education, innovation, competition -- it means flexibility in the labor market, flexibility in the product market,” Gurria said.