The US Treasury has issued a damning criticism of Germany’s chronic trade surplus in its annual report on worldwide exchange rate abuse, although it stopped short of labelling the country a currency manipulator.
Treasury officials told Congress that internal balances within the eurozone are disrupting the global trade structure, with almost nothing being done by north Europeans states to curb their huge surpluses.
The report said Germany’s current account surplus is running at 6.3pc of GDP, and Holland is even worse at 9.5pc. Yet the countries still cleave to fiscal austerity policies that constrict internal demand.
The EU’s new tool for cracking down on intra-EMU imbalances is “asymmetric” and does not give “sufficient attention to countries with large and sustained external surpluses like Germany”.
While the eurozone as a whole is roughly in trade balance, the EMU regime of austerity in the South without offsetting stimulus in the North is creating a contractinary bias, holding back global recovery.
The US Treasury said eurozone surplus states have “available room” for fiscal stimulus but refuse to act, despite repeated pledges by EU leaders that more must be done to foster growth. “They have not yet made any concrete proposals capable of yielding meaningful near-term results.”
full article by AEP here