The Day Is Coming When Germany Runs Current-Account Deficits
All the factors that led to the country’s record surpluses — wages, saving, investment and policy — are about to flip.
Balance is good, even in trade.
Photographer: Bloomberg/BloombergIn the years leading up to the pandemic, Germany racked up the world’s largest current-account surpluses, as it sold other countries much more stuff than it bought in return. And it got an earful for it. Everyone from the International Monetary Fund to the European Commission berated the government of former Chancellor Angela Merkel for distorting the global economy. Fortunately, that particular imbalance could soon be history.
Covid-19 and other freak events have recently caused huge changes in global trade flows. As a result, Germany’s surplus fell from its peak of more than 8% of gross domestic product in 2015-2016 to less than 7% last year, and is heading lower. Much of that has to do with temporary effects, such as swoons in export markets and an energy crunch that’s pushing up prices of imported gas. But soon longer-term factors will kick in, too.