Germany’s trade is frequently dubbed a major source of imbalance, causing both far-right and far-left critics of the Euro to say the monetary union is bound by a “German currency.”
A report by the national statistical service released on February 8 has shifted the focus of the conversation as it suggests that export volumes continue to surge, the world’s fourth-largest economy is beginning to compensate for the trade imbalance with higher imports.
For the first time since 2009, the German trade surplus is beginning to deflate.
Germany’s trade surplus in 2017 amounted to €244.9bn, down from €248.9bn in 2016. Total exports surged from €1,279 trillion in 2016 to €1,034 trillion in 2017 on the back of a stronger Euro when compared to both the Pound Sterling and US Dollar.
Another explanation for the rise is that Germany is importing more. In 2017, Germany saw an 8.3 percent surge in imports compared to 2016.
German growth remains robust with the biggest European economy projected to grow by 2.4 percent in 2018, up from 2,2 percent in 2017.
The passing of the finance ministry to the Social Democrats – as part of a coalition deal – is likely to mean that much of this growth will be domestic. The Social Democrats are bracing for a massive expansion in public investment for infrastructure, as well as a boost in wages, which could benefit the Eurozone’s economy by rebalancing capital transfers.