Current Account : Germany

Germany’s traditionally large export surpluses have occasionally drawn criticism abroad, but the current account shows that the foreign trade surplus is offset by heavy deficits in the “invisible” service sector. The huge amounts spent by German holiday-makers abroad, remittances by foreign workers in Germany to their relatives at home, development assistance, the Federal Republic’s contributions to the European Union and other international organizations, and a negative balance of earned and unearned income erode most of the surplus from trade.

In fact, Germany’s current account has even slipped deeply into the red since unification. The credit balance of DM79.0 billion in 1990 plunged into a deficit of DM29.9 billion in the space of only one year. And in 1996 as well, Germany’s current account showed a deficit: DM 21.5 billion. Germany is thus no longer the world’s biggest exporter of capital. On the contrary, it is having to borrow considerable foreign capital in order to finance economic recovery in the eastern part of the country.