In 2018, Germany was the economy with the largest current account surplus as it was in the previous two years according to Ifo Institute for Economic Research. With 294 billion US dollars, the surplus represents 7.4 percent of the annual economic output. The German value is higher than the countries on position two and three combined – while Japan has a surplus of 173 billion US dollars, Russia’s value is about 116 billion US dollars. The USA is expected to hold the largest deficit again with about 455 billion US dollars, increasing by a further USD 5 billion compared to 2017.
Germany’s current account surplus has fallen for the third consecutive year. It fell last year to 7.4 percent of annual economic output, after 7.9 percent in 2017, 8.5 percent in 2016 and a peak of 8.9 percent in 2015. The EU considers a maximum of six percent to be sustainable in the long term. The decline is attributable to two factors: For example, the surplus in goods exports to Europe fell because imports rose more strongly. In addition, annual economic output, including inflation, rose quite strongly by 3.4 percent.
German government officials have repeatedly said that Berlin’s fiscal and economic policies are not primarily designed to influence the current account balance. They say the trade surplus is a result of market-based supply and demand decisions by companies and consumers around the world and that it is also shaped by other factors such as oil prices and exchange rates that are hard to influence.
According to a definition used by Ifo, current account surpluses are associated with high net capital exports. Germany is thus building up more financial receivables from abroad than foreign receivables from Germany. In addition to the sale of goods or services to foreign countries, income from foreign assets also increases the current account surplus, as this increases payment claims against foreign countries. Permanently high current account surpluses can become problematic if the receivables cannot be redeemed, for example if the foreign country is no longer able to service the interest burden.
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