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Unbalanced books: Germany’s controversial current account surplus has grown even larger

06.02.2018

Stefan Kooths argues, that the German current account surplus does not need to be cut at all

Excerpt from the article

(...) In response, German Chancellor Angela Merkel has argued that Germany cannot control the fluctuations of global supply and demand or euro exchange rates, which contribute to the country’s surplus. That said, German consumers do have an effect. As explained by Professor Stefan Kooths, head of forecasting at the Kiel Institute for the World Economy, Germany’s ageing population is saving more: Germans saved 9.95 percentage of their disposable income last year, a figure that is substantially higher than that of other world economies, and in turn contributes to the surplus.

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The knock-on effect of the surplus is intensely debated, and some economists argue the surplus does not need to be cut at all. According to Kooths, German exported capital is advantageous to other economies, as long as it is market-based: "It helps the rest of the world to increase their capital stock stronger than which would otherwise be possible."

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