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Ifo says German current account surplus hit new record in 2014

Published 02/02/2015, 07:42
Updated 02/02/2015, 07:50
© Reuters. Workers assemble new Audi R8 car body in German car manufacturer's plant in Neckarsulm

BERLIN (Reuters) - Germany's current account surplus is likely to have hit a new record of $285 billion (£189.31 billion) in 2014, beating China once more, its Ifo think-tank said on Monday in a report which may fuel criticism that Europe's biggest economy is not playing its part to reduce global imbalances.

Ifo, which expects another big German surplus in 2015, said China was second with a current account surplus of about $150 billion, followed by Saudi Arabia with about $100 billion.

Ifo said the German surplus was equivalent to 7.5 percent of gross domestic product (GDP), meaning it would once again breach the European Commission's recommended upper threshold of 6 percent.

"One reason for the current account surplus is good growth in important markets like the United States and Britain," Ifo expert Steffen Henzel told Reuters. "On top of that, Germany had to pay much less for oil imports towards the end of the year because of the falling price."

Exports, which are getting a further boost from the weakness of the euro, are traditionally the motor of Germany's economy.

The European Commission and Washington have urged Berlin to boost domestic demand and imports to help reduce global economic imbalances and fuel global growth, including in the euro zone.

© Reuters. Workers assemble new Audi R8 car body in German car manufacturer's plant in Neckarsulm

Germany argues that it has more than halved its current account surplus with the euro zone as a share of GDP since 2007 and that it is relying more on domestic demand than exports to drive growth at the moment.

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