Germany's account surplus on rise

Source: Xinhua| 2018-08-10 23:40:57|Editor: Mu Xuequan
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BERLIN, Aug. 10 (Xinhua) -- Germany has recorded an increase in the surplus on its national current account balance in June, figures published on Friday by the German Central Bank (Bundesbank) showed.

According to the Frankfurt-based institute, the German current account surplus was measured at 26.2 billion euros in June, up from a 12.9 billion euros in May.

The current account is an important economic indicator that measures the sum of a country's balance of trade (imports and exports) and net income (or losses) from international investments.

The monthly increase measured by the Bundesbank was due growth in the surplus on the so-called "invisibles" account which refers to the rendering of cross-border services in which no physical objects are transferred, as well as flows of capital between countries. By contrast, the size of the traditional surplus run by Germany on trade in goods was largely unchanged in June compared to the previous month.

U.S. president Donald Trump and the International Monetary Fund (IMF) have repeatedly criticized Germany for allegedly contributing to global current imbalances by pursuing a narrowly-export-driven growth model. The IMF argues that permanent surpluses above six percent of Gross Domestic Product (GDP) endanger economic stability because they imply corresponding deficits and a build-up of international liabilities in other countries.

In an unusual public intervention, IMF chief economist Maurice Obstfeld recently urged German policymakers in the newspaper Handelsblatt to take steps to reign in the country's "excessive surpluses." According to recent data by the IMF and World Bank, Germany has run current account surpluses above 8 percent of GDP for the past three years.

Obstfeld argued that a high surplus was "not necessarily a sign of strength but an indicator of weak domestic investment and a household and corporate savings rate which is higher than needed." As a consequence, Berlin would be well-advised to increase government spending, especially in public infrastructure, in order to animate firms to invest more at home.