The latest quarterly figures for Germany have come out and they show an improving domestic demand trend in Germany. Net trade lowered economic growth because of weak export volume. These results and the institution of a minimum wage will quell much of the criticism of Germany’s large trade surplus.
Regarding the trade and current account imbalance, my contention all along has been that the Germans were willing to boost domestic demand but were constrained by the euro. The Germans are also concerned about an overheating housing market. My view in January was that the FDP were out because they were going to miss the 5% hurdle. German Chancellor Angela Merkel was already positioning herself to be able to govern with the SPD, and that there was going to be a leftward turn ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.