The German Scapegoat

Recent criticism of Germany's external surplus overlooks the fact that the country represents just the tip of a Teutonic iceberg: All northern European countries with a Germanic language are running a current-account surplus. Indeed, the Netherlands, Switzerland, Sweden, and Norway are all running larger surpluses relative to GDP.

BRUSSELS – Could Germany, which accounts for 1% of the world’s population and less than 5% of its GDP, actually be responsible for the sorry state of the global economy? The US Treasury Department started the chorus with a report on currency manipulators that criticized Germany’s current-account surplus. The European Commission added its voice last month, when it published its scorecard on macroeconomic imbalances and called for an in-depth analysis of the German surplus.

The emphasis on Germany seems much more justified within the context of Europe. But, even there, Germany represents less than 30% of eurozone GDP (and less than one-quarter of output in the EU as a whole). Germany is important but not dominant.

This focus on Germany also overlooks the fact that the country represents just the tip of a Teutonic iceberg: All northern European countries with a Germanic language are running a current-account surplus. Indeed, the Netherlands, Switzerland, Sweden, and Norway are all running surpluses that are larger as a proportion of GDP than Germany’s.

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