Berlin does not practice " social dumping
According to forecasts by the European Commission, the current account is expected to record a surplus this year of 7% of gross domestic product ( GDP) , before returning to 6.4% in 2014 and 2015.
It is true that international trade Germany is doing well today , but we must also remember that the current account balance was still negative there is little , especially during the years following reunification.
INCOME FROM ABROAD
What the critics of Germany overlook is about a third of the current account surplus is generated by income from abroad. This means that a third of this amount is not based on foreign trade, but on income from German capital invested or invested abroad in the past. As regards the remaining two thirds - for most of the trade balance - any planner intervention is neither possible nor desirable in the context of the social market economy . It must be remembered, the planned economy has historically experienced a resounding failure in Germany.
German surpluses rather reflect the high competitiveness of the economy and the fact that goods made in Germany are in demand worldwide. Germany is particularly present in the growth regions , with quality products and an attractive range .
Its trading partners benefit from this situation . When German companies export their subcontractors abroad in Europe and benefit greatly . While the share of German exports finally declined in the euro area export surpluses increase in non-European countries. Note especially the growing importance of the North American market.
The current account surpluses are the result of economic activity and are in no way favored by interventionism , protectionism or state . As a member of the European monetary union, Germany can not - unlike other countries - to improve his chances for export by an artificial devaluation of its currency.
Various international bodies are also in the same direction. Thus, the International Monetary Fund, in a study published in August found that the current account surplus of Germany is not due to drifts of its economic policy . The cause would rather tax and structural deficits of its trading partners.
Non-price competitiveness
Already in 2011, the European Commission stressed that current account surpluses have no destabilizing effect on the euro area. The prices of German goods or wage levels - set by the social partners without consulting the state - is only one factor among many that can influence the current account surplus .
In December 2012, the European Commission noted that wage developments in Germany plays only a minor role in current account surpluses . Another factor is the non-price competitiveness , such as the quality of German products.
Moreover, in the industrial sector in the euro area, it is only in Belgium that the hourly cost of labor ( 41.91 euros) is higher than that of Germany ( 36.98 euros) . The allegation that Germany would pursue wage dumping in order to improve his chances for export is unfounded , as also shown the current rebound in domestic demand.
It is therefore wrong to claim that the German fiscal policy , which aims to reduce deficits, flange domestic demand artificially. For two years , the European Commission provides for a German budget close to balance . But the reduction of public debt to GDP ratio is thus based on a solid growth thereof .
The euro area also benefits sound public finances in Germany on the international financial markets, the German credit is the keystone of European bailouts. If heavily dug its public debt to stimulate domestic demand , solvency - and, ultimately , the stability of the entire eurozone - might be questioned .
Criticism of German current account surpluses is unfounded because they are not fed by the intervention of the state. The balance of the current account in Germany is the result of thousands of individual decisions taken by economic actors and market adjustment processes that are part of the global competition.
Thanks to the current dynamics of the domestic economy , Germany is an important contribution to European stability and the reduction of imbalances. Other structural reforms to strengthen competitiveness are necessary to accelerate the reduction of imbalances in the euro area.
Susanne Wasum -Rainer ( Ambassador of Germany in France )
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