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Clifford Beaumont: Germany's Trade Surplus Contracts

Clifford Beaumont: As domestic demand increases and imports rise, Germany's trade balance has shrunk for the first time since 2009.
    TAIPEI, TAIWAN, February 13, 2018 /24-7PressRelease/ -- According to recently released official data, Germany's trade surplus declined for the first time in 8 years last year. Taipei, Taiwan based Clifford Beaumont strategists believe that this is further indication that domestic demand is attracting more imports and gradually re-balancing the country's traditionally export driven economy.

German Chancellor Angela Merkel has come under fire from both the European Commission and U.S. President Donald Trump for Germany's big trade surplus and, Clifford Beaumont economists say, doubt about the merits of free trade is growing in some poorer euro zone nations.

International Monetary Fund chief, Christine Lagarde has encouraged Berlin to increase domestic spending and improve imports, cautioning that swelling current account surpluses in countries such as Germany are partially accountable for the upsurge of protectionism in other regions.

A Clifford Beaumont analyst said that the improvement of the trade balance is being fueled by imports as opposed to exports which means that Germany does not have to shrink exports to remain in a strong economic position.

According to data released by the Federal Statistics Office, last year Germany's trade surplus contracted to 244.9 billion euros from its record peak of 248.9 billion euros in 2016. This was the first contraction in 8 years.

Germany's current account surplus that gauges the flow of services, investments and goods decreased from 259.3 billion euros in 2016 to 257.1 billion euros last year.

Official data also revealed that exports increased by 6.3 percent in the last year to reach an all-time high of 1.28 trillion euros. This increase was outdone by an 8.3 percent increase in imports to a record high 1.03 trillion euros.


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