Germany’s large current-account surplus is the result of the competitiveness of the German economy and the government has no influence over it, the German Ministry of Finance said in a report yesterday, adding that the surplus will shrink in coming years.
The new US administration has accused Germany of exploiting a weak euro to gain a trade advantage and called for bilateral discussions to reduce the US$65 billion US trade deficit with Germany.
The ministry said in its monthly report that rising private consumption, an eventual normalization of the European Central Bank’s expansionary monetary policy and demographic factors in Germany are likely to narrow the surplus.
“The German current-account surplus is the result of many factors. Above all it is the result of the exceptional competitiveness of the German economy,” the ministry said. “The current account in Germany is not controlled by the state. In any case, possible economic and political actions [to influence the account] would be very limited.”
The ministry said the current account, which stood at 8.3 percent of output last year, would fall to 8 percent by next year.
It stood at 8.6 percent of GDP in 2015.
Meanwhile, consumers in Germany are more confident about the economy and keen to spend money, but concerned about the impact of inflation on their incomes, a closely-watched survey showed yesterday.
Market research firm GfK’s forward-looking consumer confidence reading for next month slipped to 9.8 points after 10 this month, slightly short of analysts’ expectations, it said in a statement.
“Increased inflation in Germany and stronger fears about purchasing power apparently prevented a broader-based recovery,” GfK said.
The pollsters found that people expected the strength of Europe’s largest economy to continue.
Good news keeps coming in for Germany even as it battles uncertainty on a number of fronts, including upcoming elections at home and in neighboring France, US President Donald Trump’s tough talk on Berlin’s trade surplus and Brexit.
On Monday, the Council of Economic Experts that advises the German government upgraded its economic forecasts slightly, predicting 1.4 percent growth this year after 1.9 percent last year.
A confident outlook has boosted consumers’ readiness to splash out, a GfK sub-index measuring the public’s inclination to buy showed.
Record-low unemployment also means people expect to remain in work, with a steady income on hand to cover big purchases.
Additional reporting by AFP
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