Germany Pushes Europe’s Trade Surplus Higher, Invites More Scruting on Unfair Advantage Bestowed by Weak Euro
- Written by: Gary Howes
-
German exports continue to grow ensuring the Eurozone’s trade surplus with the rest of the world was an impressive 6% higher in December 2016 than it was a year earlier.
The first estimate for Eurozone exports of goods to the rest of the world in December 2016 was €178.6 billion, an increase of 6% compared with December 2015 (€168.7 bn).
Imports from the rest of the world stood at €150.5 bn, a rise of 4% compared with December 2015 (€144.4 bn).
As a result, the Eurozone recorded a €28.1 bn surplus in trade in goods with the rest of the world in December 2016, compared with +€24.4 bn in December 2015.
German exports stood at €1 210.3 in December 2016 while imports amounted to just €953 mn.
The news confirms that Germany is enjoying the benefits accrued by having an artificial currency.
Recall the fuss created when Trump’s new trade adviser Peter Navarro suggested Germany was enjoying an unfair trade advantage thanks to its artificially low currency?
Well, these data aren’t going to help the German defence.
Germany’s strong economy implies the Euro should be much higher than its rivals, but the European Central Bank continues to keep the currency artificially weak through its asset purchase programme and by keeping interest rates at record lows.
Indeed, we reported recently that PIMCO's Joachim Fels has suggested the Euro must be allowed to recover to avoid antagonising the new US administration that could take other measures to balance what they believe to be an unfair playing field.
The moves are designed to help the weakest members of the Eurozone - the likes of Greece.
The fact is clear - Germany is getting rich off this lopsided scenario.
