German Surplus to Shrink as Population Ages

Germany has launched a two-pronged attack on U.S. President Donald Trump’s charge that its current account surplus is too high — don’t blame us for being good at what we do, and our aging population is going to eat it all up anyway.

The finance ministry said in its monthly report on Thursday that as Germany’s society ages fast, its swelling senior population will be more inclined to spend at home rather than save abroad, boosting consumption and shrinking the surplus.

“In a society where aging is growing, savings — including capital invested abroad –- will fall as pensioners use that to finance their consumption in Germany,” it said. “This will probably reduce the current account surplus and could even turn it into a deficit.”

At the same time, it said that the surplus — which irks the International Monetary Fund and many in Europe as well — was the result, frankly, of Germany being better than others at business.

It said it was down to the competitiveness of the German economy over which the government had no influence. “The current account in Germany is not controlled by the state,” the ministry said.

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza