Hope for Germany

Good news from Germany: German exports grew 10% in 2004 for a record level “in spite of the expensive Euro and high oil prices.” This is good news considering the economic difficulties that Germany and Europe generally have been experiencing since the turn of the century. Imports also increased by 7.7% in 2004, but that still meant an export surplus of 155.6 Billion Euros, “a new historical high.” The surplus is also expected to grow in 2005.

Traditionally, Germany has always had an export surplus (contrasted with America’s constant trade deficit). In fact, the German economy is dependent on exports, which is why a strong Euro has been an economic difficulty for Germany in the last couple of years. The weak dollar policy causes German goods to be more expensive abroad and thus drives exports from Germany and Europe down. That is one reason that this dependence on exports is not altogether positive:

Als erfreulichstes Signal der Zahlen wertete der Volkswirt [Kater] den Import-Zuwachs: „Das deutet auf eine steigende Binnennachfrage hin.“ Ein Exportüberschuß sei nicht automatisch erstrebenswert. Er wies auch daraufhin, daß Kapital aus Deutschland abfließe und Investoren andere Standorte bevorzugten. „Ich bin strikt dagegen, die Außenhandelsbilanz als Erfolgsmesser für eine Volkswirtschaft anzusehen.“ Es gebe zum Beispiel wirtschaftlich schwache afrikanische Länder, die auf Grund ihrer Rohstoffvorkommen einen Überschuß verzeichneten. Die USA wiederum als stärkste Wirtschaftsmacht der Welt wiesen seit langem ein Defizit auf.

It is true, as this economist notes, that an export surplus is not automatically desirable. But this is definitely positive news for a German economy that needs to see growth again if it is to deal with other pressing labor, pension, and education reform.

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