Ifo: germany with highest surplus in the world

Ifo: germany with highest surplus in the world

According to calculations by the ifo institute, germany’s strong export performance is responsible for the world’s largest current account surplus for the third year in succession. Germany has been exporting more than it imports for some time now. This generates criticism from trading partners.

Although the surplus was allowed to fall slightly in 2018 to 7.8 percent of economic output, down from 7.9 percent last year, the munich research institute announced in munich on monday. Nevertheless, with an expected 299 billion dollars (264 billion euros), germany was allowed to become the country with the largest current account surplus, as in the previous two years. The main reason is trade in goods.

The federal republic produces more than it consumes, many goods and services are exported. Exports have been outstripping imports for some time now. In addition to the exchange of goods, the balance of payments also includes services and income from foreign assets.

According to the calculations, the USA was once again the country with the largest current account deficit, at just under 420 billion dollars. However, this corresponds to only 2.2 percent of annual economic output. The USA has been importing more than it exports for years. The deficits are a thorn in president donald trump’s side. He repeatedly accuses countries with large trade surpluses with the USA of unfair practices. In the past, germany was threatened with punitive tariffs on cars.

Second only to germany, according to calculations, is japan, with a current account surplus of about $200 billion this year. The netherlands came third with around 110 billion dollars. China, on the other hand, is not calculated to be in the top three this year. Due to very strong imports and weaker exports, the goods surplus had fallen. China has exported less, especially to the USA and europe.

Ifo expert christian grimme attributed the slight decline in germany in part to the fact that the surplus in goods exports is no longer expected to increase. At the same time, income from foreign assets was allowed to fall slightly.

Germany’s strong exports are also a source of criticism for other countries that import particularly heavily, as this increases imbalances in world trade. The european union considers a current account surplus of more than six percent of gross domestic product to be a problem for stability. According to the international monetary fund (IMF), higher wages and salaries could help reduce the surplus. If the burghers have more money in their pockets, this could boost domestic consumption. Which in turn could boost demand for imports.

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