The German Current Account Surplus – Holding Captive the German and Global Economies

The size of Germany's current account surplus is an economic phenomenon as the forces behind it go beyond the simple competiveness of German exports. Indeed, the widening gap between domestic savings and investment is the determinant of this trade surplus, which is shaped by the actors of the German economy; namely firms, the government and households. Furthermore, the harmful impact of this trade surplus reaches across the domestic economy – where it is a source of rising inequality and limited social welfare – to the global stage, where it acts as a means of destabilizing the economies of countries that accumulate unsustainable debt through trade deficits.

Key Questions Answered

– How and why has the German current account surplus reached enormous levels?

– Why is the German current account surplus destabilizing for the global economy?

– Is the German exporting growth model beneficial for the domestic economy?


The German exporting model has been based on the depreciation of German labor, as that is reflected by industrial relations and labor reforms. Simultaneously, the propensity of German households to save has led to subdued domestic consumption, reinforcing the exporting model. Furthermore, the attachment of the German government to fiscal surpluses has further enhanced this trend.

Reasons to buy


Table of Contents

Table of Contents

Overview 2

Catalyst 2

Summary 2

Export model creates huge surplus 6

Size of German exports and trade surplus is enormous in relation to national economy 6

Current account surplus of Germany is a global economic phenomenon 7

The force behind the German surpluses are the domestic savings and investment gap 9

Household savings are the cause but not the accumulator of the trade surpluses 10

German government’s attachment to fiscal savings urges trade surpluses and puts brake on domestic consumption 12

Firms have accumulated capital stock exploiting the internal depreciation of labor and the German industrial relations model 14

German trade surplus sets at risk the sustainability of national and global economies 18

The trade surpluses of Germany are the trade deficits of the other countries 19

Germany exploits fact that Euro is an undervalued currency for her and an overvalued currency for the other Euro Area members 20

German economic growth model does not seem to work for its people 21

Current account surplus built at expense of household income 21

Consumption rigidity of German households limits their own prosperity 27

There is no robust economy without domestic consumption Germany is playing with fire following a self-destructive model 27

Conclusions 28

Appendix 29

Sources 29

Further Reading 29

About MarketLine 30

Disclaimer 30

List of Tables

List of Tables

Table 1: Germany Key macroeconomic indicators, 2010-16 7

Table 2: International trade figures of the largest economies, 2016 8

Table 3: Household Savings, 2010-15, (% GDP) 11

Table 4: Public Finance of Germany, 2010-2016, (% GDP) 12

Table 5: Public Finance of Germany, 2010-2016, EUR (bn) 13

Table 6: Government spending of Germany, 2010-2016, (% GDP) 13

Table 7: Government Spending of Germany by function, 2010-2015, (% GDP) 14

Table 8: Government Spending of Germany, 2008-2016, (% GDP) 17

Table 9: Net Lending, Capital Account Balance and Foreign Account Balance of Germany, 2005 – 2016, ($bn) 18

Table 10: Correlation pattern of the overall trade balance of certain countries and their trade balance with Germany, based on 2001 2016 trade figures 19

Table 11: Income and living conditions in Germany and the Euro Area, 2005-2015, (%) 22

Table 12: At-risk-of-poverty rate before and after social transfers, 2015 23

Table 13: General government expenditure in social protection in Germany, 2005-2015, (% GDP) 23

Table 14: Inequality of income distribution, 2015 24

Table 15: People at risk of poverty or social exclusion by educational attainment level (population aged 18 and over), 2005-2015, (%) 26

List of Figures

List of Figures

Figure 1: German exports and foreign trade balance 1991-2016, current prices ($bn) 6

Figure 2: Current account balance, 2000-2016, ($bn) 8

Figure 3: Gross domestic savings and gross capital formation, 2000-2016, (% GDP) 9

Figure 4: Household Savings and Savings Rate in Germany, 2000-2016, (% GDP) 10

Figure 5: Household Financial Assets in Germany, 2015, (% total) 11

Figure 6: Household Consumption of the most developed economies, 2010-2016, (% GDP) 12

Figure 7: Relative Unit Labor Costs (1999-2016), 1999 index-based 15

Figure 8: Gross wages and salaries and output per employed person in the manufacturing industry, 200-2016, (2010-index based) 15

Figure 9: Unemployment and growth of labor compensation, 2010-16 (%) 16

Figure 10: External Position of the Bundesbank in the ECB, 1999-2016 (EURm) 20

Figure 11: Gini coefficient of net household income in Germany, (1991-2014) 22

Figure 12: Index of labor costs in Germany, 1996-2016, 2012 index-base year 25


Discounts available for multiple report purchases.
+44 (0) 161 359 5817

Saved reports