Current Account Surplus To Remain Too Large
BMI View: Germany's current account surplus is close to peaking. With export growth set to tail off in H214, and steadily rising import demand, we project the surplus to narrow to 7.1% and 6.7% of GDP in 2014 and 2015 respectively. However, lack of accommodative fiscal policy will prevent more rapid narrowing, to the detriment of long-term economic stability.
Weakening demand in key export markets will combine with eroding export competitiveness to drive Germany's current account surplus lower over the next few years. Timing this slowdown is hard, in large part because Germany's impressive export diversification over the past decade means it is well hedged against a slump in demand from any one market.
We believe the current account surplus peaked at EUR201bn (7.4% of GDP) in 2013, and will narrow gradually this year to EUR200bn (7.1% of GDP), then drop off more rapidly to just EUR136bn (4.3% of GDP) by 2018. However, more significant narrowing will be prevented by the authorities' desire to maintain export competitiveness at the expense of stronger consumption.
|Surplus To Peak 2013|
|Germany - Current Account Balance, % GDP|