Ifo economist Christian Grimme said “the German current account surplus is based on trade in goods”, adding that exports exceeded imports by 9 billion in the first half of the year, mainly due to strong demand from other European countries.
Germany will almost certainly breach once again the European Commission’s recommended upper threshold of 6% of GDP. Both Brussels and Washington have urged Berlin to lift domestic demand and imports to help reduce reduce global economic imbalances and fuel global growth, including within the euro zone.
Berlin however has rejected such criticism, saying it already lifted domestic demand by introducing a national minimum wage in 2015 and agreeing on a strong hike in pension entitlements in 2016.
Meanwhile, Eurozone business growth in August was at its weakest since the start of last year, a private sector survey showed on Monday.
Back in July, ECB President Mario Draghi warned that the Brexit vote in June could prove to be a significant “headwind” slowing the recovery. He had previously estimated the vote could shave up to half a%age point off Eurozone economic growth over three years.
Eurostat confirmed gross domestic product growth in the 19 countries sharing the euro rose 0.3% quarter-on-quarter for a 1.6% year-on-year rise, in line with previous estimates and market expectations.
But growth slowed sharply quarter-on-quarter in the euro zone's top three economies, plunging in France from 0.7% in the first quarter to zero and in Italy from 0.3% to zero. In Germany it weakened to 0.4% from 0.7%.