Why Germany's current-account surplus is bad for the world economy - 0 views
www.economist.com/...ys-current-account-surplus-bad
Germeny politics US trump policy economics economic
shared by krystalxu on 10 Oct 17
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the stage is set for a clash between a protectionist America and a free-trading Germany.
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He is weighing whether to impose tariffs on steel imports into America, a move that would almost certainly provoke retaliation.
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An imminent free-trade deal between Japan and the European Union will add substance to her rhetoric (see article).
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Mr Trump has grasped an inconvenient truth. He has admonished Germany for its trade surplus, which stood at almost $300bn last year, the world’s largest (China’s hoard was a mere $200bn).
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put a stop to sales of German cars—may be self-defeating, but the fact is that Germany saves too much and spends too little.
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It is an instinct that helps explain Germany’s transformation since the late 1990s from Europe’s sick man to today’s muscle-bound champion.
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There is much to envy in Germany’s model. Harmony between firms and workers has been one of the main reasons for the economy’s outperformance.
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Exporters do not invest their windfall profits at home. And Germany is not alone; Sweden, Switzerland, Denmark and the Netherlands have been piling up big surpluses, too.
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For a large economy at full employment to run a current-account surplus in excess of 8% of GDP puts unreasonable strain on the global trading system.
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Germany’s structural budget balance has gone from a deficit of over 3% of GDP in 2010 to a small surplus.
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The economy lags behind in its readiness for digitalisation, ranking 25th in the world in average download speeds.