Monday, October 7, 2013

Germany's Current Account Surpluses

Greece's current account deficit has been reduced significantly in the last 3 years. So have the current account deficits of other countries of the periphery. The reverse is not true for Germany: its current account suplus has not only remained firm; it has even increased in the last 3 years.

Many international commentators create the impression as though all Germans were ignorant of the downside of current account surpluses (when they are excessively high). Yes, the idea of being the "export champion of the world" seems to have taken roots as a virtue in general German thinking. But no, it is not correct that no one in Germany questions this idea.

Discussions among German economists, intellectuals, commentators, etc. about the country's enormous current account surpluses have been intensifying of late. Below are just 2 interesting articles:

Die Crux mit dem deutschen Leistungsbilanz├╝berschuss
Der Fluch des guten Geldes

The tenor is always the same: current account surpluses cause, as a mathematical consequence, capital exports. Germany is now the world's largest exporter of capital; the largest provider of international capital. That could have damaging consequences for the German economy at some point in the future.

I found particularly former Chancellor Helmut Schmidt's answer interesting when he was asked whether Germany should reduce its current account surplus. His answer:

"I believe that we really have to reduce our current account surplus. If we don't do it, others will do it for us and we may not like the way in which they will do that. Fourty years ago, there was a law in Germany which stressed the importance of maintaining a balance in the country's external accounts. Today, we are far away from such a balance."


  1. Some critic say it more clear than Mr. Schmidt: It could be that the German capital exports are lost and Germans worked for no salary!


  2. This has also been mentioned in a TV-discussion between Prof. Hans-Werner Sinn und G. Verheugen ("Unter den Linden"/Phoenix):
    starting at minute 35:10

    1. Thank you for this video. It's about the most honest self-appraisal of German opinion leaders that I have seen to date. Hard to believe that they did this already 1-1/2 years ago!