Economic Growth German Exports Hit Record High Amidst U.S. Tensions

Germany's trade surplus has gone up, stoking claims made by a top Trump adviser that the country is capitalizing on a weak euro to "exploit" the U.S. and other countries.
Quelle: dpa
Germany's trade surplus is up, but trouble could be on the horizon.
(Source: dpa)

Germany's trade surplus is holding at a record high in 2016, according to official data released Thursday – and while it should be cause for celebration, it could put more strain on a relationship with U.S. President Donald Trump's administration that is already proving difficult.

"The record surplus will continue to fuel the conflict with the U.S.A. and within the E.U.," Marcel Fratzscher, head of the German Institute for Economic Research, told Reuters.

"European neighbors would benefit from stronger investment in Germany. Germany, however, would profit first and foremost, as the investment gap and the resulting excessive trade surpluses are detrimental to the domestic economy."

Germany's trade surplus for 2016 rose to €252.9 billion, or $270.5 billion, exceeding the previous high of €244.3 billion in 2015, the Federal Statistics Office said Thursday.

The new trade surplus record comes after claims last week by Mr. Trump's top trade adviser that Germany uses a "grossly undervalued" euro to "exploit" the United States and its European counterparts, also calling the currency an "implicit Deutsche Mark."

German Chancellor Angela Merkel has rejected the accusation, saying the bloc's biggest economy has always called on the European Central Bank to pursue an independent monetary policy. She emphasized that German companies thrive on the global market because of their competitive products.

Even though Germany's trade surplus grew, exports fell 3.3 percent in December and imports remained unchanged. Industrial production also fell in December, but orders rose by the most in more than two years, leading experts to believe the first quarter of 2017 is off to a solid start.

On Wednesday, Germany's Chambers of Commerce slightly raised its 2017 growth forecast for the economy to 1.6 percent. However the association warned that companies were worried about protectionism from across the Atlantic, as well as Brexit and potential currency turbulence.