Ifo says German current account surplus to hit record high

Germany’s current account surplus will likely hit a new record of €250 billion euros in 2015, but it will lose the top spot to China, the Ifo think-tank said on Tuesday.

Ifo said China may see its current account surplus balloon to around $330 billion (€ 291bn) from $220 billion last year, mainly due to falling imports as its economy slows.

Saudi Arabia, which last year had the third-biggest current account surplus at about $100 billion, should have a balanced current account due to the falling oil price.

"Germany will hit a record surplus but it will no longer be the biggest in the world," Ifo economist Steffen Henzel told Reuters.

Exports from Germany, traditionally the motor of the European economy, are being driven by the weak euro. A further €5 billion of its current account surplus can be attributed to cheaper crude oil imports, Ifo said.

Ifo said the German surplus would be equivalent to around 8.4 per cent of gross domestic product, meaning it would once again breach the European Commission’s recommended upper threshold of 6 per cent.

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.

IMF managing director Christine Lagarde and the US Treasury have both called on it to stimulate domestic demand to facilitate a rebalancing, but their message has largely been rebuffed.

Reuters