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Germany’s Trade Surplus Falls

Summary:
Germany’s trade surplus, criticised by France’s new President Emmanuel Macron, has fallen. The surplus in goods trade fell to 7.5 percent of annual economic output (GDP) in the first quarter of 2017, versus 7.6 percent in the fourth quarter of 2016, reported the ifo Institute citing the latest figures released by the German Federal Statistics Office. “This means that the trade surplus is already far below its record level to date of 8.4 percent seen in the second quarter of 2016. The high surplus at that time was due to a sharp drop in the price of oil imports. Even today, low import prices are still estimated to account for a good 1.5 percentage points of the trade surplus,” said Timo Wollmershaeuser, Interim Director of the ifo

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Germany’s trade surplus, criticised by France’s new President Emmanuel Macron, has fallen. The surplus in goods trade fell to 7.5 percent of annual economic output (GDP) in the first quarter of 2017, versus 7.6 percent in the fourth quarter of 2016, reported the ifo Institute citing the latest figures released by the German Federal Statistics Office.

“This means that the trade surplus is already far below its record level to date of 8.4 percent seen in the second quarter of 2016. The high surplus at that time was due to a sharp drop in the price of oil imports. Even today, low import prices are still estimated to account for a good 1.5 percentage points of the trade surplus,” said Timo Wollmershaeuser, Interim Director of the ifo Center for Business Cycle Analysis and Surveys. “Without the oil price effect Germany’s trade surplus would only be around 6.0 percent,” he added.

At the same time, however, Germany’s current account surplus rose to 8 percent in the first quarter of 2017 from 7.7 percent in the previous quarter. In addition to goods imports and exports, this figure also includes cross-border services, income from Germany’s net external assets and Germany’s public transfers abroad. Macron is not the only leader to criticise Germany’s trade surplus, which has also come under fire from US President Donald Trump and Managing Director of the International Monetary Fund Christine Lagarde. The European Commission also considers Germany’s trade surplus to be too high.

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

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