The causes for Germany’s trade surplus is neither the ECB or other European countries. Marcel Fratzscher, President of DIW, is, first of all, the German policy in the duty.
The indignation in Germany over the refusal of the ECB to exit its expansionary monetary policy, is growing again and is likely to worsen after the next ECB decision in early June. The economy is booming but Inflation is on the increase, and the risks are lower, so the perception of many in our country. Is that true? Is the ECB the wrong way, and she is not to blame for many problems, such as our trade surplus, as some claimed? Or the German criticism is focused too much on the short-term own interests?
It is too early to tighten monetary policy to attract, because the economy of the Euro-Zone is hardly greater than in 2008, and the unemployment rate is still too high. Therefore, it is not surprising that the ECB fell short of its mandate of price stability. Although the latest inflation figures for Germany are encouraging, they are based on short-term developments. It is doubtful whether the ECB can reach up to the end of 2018, its goal of price stability. As long as you can’t be sure of that, can’t you also change its monetary policy stance.
Marcel Fratzscher, President of the German Institute for economic research
Exit came far too early
The second criticism in Germany that the ECB is acting too late and the right timing of the exit is missed, is important. The risks of an early exit are currently significantly higher than that of a late. This experience has made the ECB in 2008 and 2011, when it raised interest rates and then of the crises was obtained. The ECB can. the risks of Brexit, the economic policy of U.S. President Trump, not ignore the difficulties of many banks and geopolitical risks The expansionary monetary policy has, without doubt, risks to the small German savers, and many German financial institutions. It is true, however, that it is in our own best interest, if the ECB helps with its monetary policy to allow an end to the European crisis, and therefore growth and Jobs in Germany in the long term.
Particularly disturbing to the German criticism of the ECB, the double standards with which it is made. As the Federal government, the European reform rejects the proposals of the new French President, Macron, so they also repeated the ECB for Germany’s high trade surplus is responsible to make their own mistakes to distract.
The German policy is good at criticism of our European neighbours, for their lack of structural reforms and high debt to Express. You are not criticised, and rightly so, that many of the other Europeans respect the common European rules.
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Germany breaks the rules
Germany does not consider itself to these rules. So, Germany violated already for many years, with its current account surplus is now more than eight percent of the common rules. Instead of acknowledging this, and to make an active part in the solution of the problem in Germany, the Federal government is to circumvent these rules, as nonsensical to dismiss and deny their own errors.
Particularly cynical is the attempt to make others for the own economic policy mistakes. So it is not the ECB or the economic policy of other European countries in debt to Germany’s excessive trade surplus, but first of all, the German policy. Responsible for the trade surplus, exports, or the Euro, but Germany’s big weakness in Investment, which is mainly caused by inadequate framework conditions for private investment, such as excessive bureaucracy, regulatory uncertainty, skill shortages and low public investment in education, Innovation and infrastructure are not.
In this case, Germany would benefit most from the reduction in the trade surplus due to higher investment, which would improve the growth, income and wealth of the German citizens.
If Germany is to improve its economic policy and Europe is going to reform, then we must, first of all, from our high horse and our double standards end. Germany can claim in a credible reform of its neighbors only if it keeps itself to the European rules. To make other for the own mistakes, as does the Federal government with the ECB, the German trade surplus, is not only wrong, but harmful to Europe.
Marcel Fratzscher head of the German Institute for economic research (DIW) in Berlin. He is also a Professor of macro Economics at the Humboldt-University of Berlin.
The article is on 29. May 2017 first appeared in the Handelsblatt.
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