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IMF: Germany's surplus contributes to trade tensions

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rocky
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IMF: Germany's surplus contributes to trade tensions

Post by rocky on Tue 07 Aug 2018, 3:02 am

 IMF: Germany's surplus contributes to trade tensions




- Germany's reluctance to reduce its trade surplus contributes to trade tensions and increases the risk of undermining global financial stability, the IMF's chief economist, Maurice Obstfeld, said.
"In surplus countries (like the current account), like Germany, we see hesitant measures, at best, to counter the surplus," wrote Obstfeld in an article in the German daily Die Welt.
The IMF and the European Commission say Germany should boost domestic demand by raising wages and investment to reduce what they describe as global economic imbalances. Since his election, US President Donald Trump has repeatedly criticized German export power.
Countries with a very low current account balance, such as the United States, should reduce budget deficits and encourage households to save more and gradually adjust their monetary policy, Opstfeld said.
He urged countries with very high weights such as Germany to increase government spending, for example by investing in infrastructure or digitization, so that companies invest more at home rather than looking outward.
"The net offshore positions will be further separated, increasing the risk of distortions caused by currency or asset price adjustments in debtor countries, which will hurt everyone," he said.
"If there is a sudden adjustment, both debtor and creditor countries will suffer," he said.


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