US Treasury Secretary Jacob Lew has urged Berlin to do more to balance out its huge trade surplus. Germany’s strong dependence on exports for growth was a key issue in his talks with German Finance Minister Schäuble.
Mindful of the differences in perceptions between Berlin and Washington, US Treasury Secretary Jacob Lew said it would be a good thing if Berlin would do more to spur domestic demand and investment.
Following talks with German Finance Minister Wolfgang Schäuble in Berlin on Wednesday, Lew said it was very important for the eurozone that Germany narrowed the gap between its exports and imports.
Lew's call for more proactive policies to achieve this came just hours after official German data showed a widening trade surplus for the month of November. German exports rose 0.3 percent compared with the previous month to 93.2 billion euros ($127.13 billion), while imports declined 1.1 percent to 75.4 billion euros.
In recent months, Germany has come under fire for its persistently high trade surplus, with critics arguing that its economic prowess comes at the expense of the eurozone's weaker members. In October, the US Treasury riled Germany by saying that it needed to tap its surpluses to boost demand and help the eurozone recover from recession. The EU Commission even announced an investigation into the German trade surplus.
On Wednesday, the German Finance Minister, however, again defended his policies, saying German growth was primarily fuelled by robust domestic consumption. Moreover, German trade would help the eurozone's overall export performance, he added.
In his talks with the US Treasury Secretary, Schäuble also raised the issue of accommodative monetary policy currently being pursued by the US Federal Reserve and other central banks. Schäuble warned of the dangers involved in flooding financial markets with cheap money.
“I've pointed out that we need to closely watch excess liquidity in the markets to prevent the emergence of new speculative bubbles,” he said.
Lew responded by saying that growth in global economic output and employment was needed to achieve that.
uhe/ph (AFP, Reuters, dpa, AP)