Videos | November 13, 2013

The puzzle of the German trade surplus

Tensions have risen between the United States and Germany in the last month over a hot economic issue, ING head of macroeconomics Maarten Leen explains in the November 2013 economic update video for eZonomics.


Time to buy more?
Under question is whether Germany (and the Netherlands) have hampered the European adjustment process by running surpluses on their trade balance. Leen tells how this means that the countries export more than they import, or, put differently, produce more than they consume.
“The US says it would be better for struggling southern European countries if Germany spent more and increased its imports – leading to higher growth in those economies under pressure.”

Balance is better
Leen explains that Germany has several arguments as to why the situation is under control – including a change in the composition of its surplus.
No matter who is right, says Leen, the bottom line is that bringing spending closer to income across all Eurozone countries is a key to the European recovery.
And “a quicker adjustment to get growth going across the entire region would be better for the world economy than a slow one”.

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eZonomics team
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