Investing.com - The European Commission said Wednesday that it is to launch a probe into Germany’s trade surplus in the wake of recent criticism of the nation’s current account surplus.
Germany’s current account surplus rose to 7% of gross domestic product in 2012 and has exceeded the EC's threshold of 6% of national GDP each year since 2007, prompting criticism of the country for undermining the recovery in the rest of the euro zone.
The EC said it was launching "in-depth review" of both Germany and Luxembourg “in order to better scrutinize their external position and analyze internal developments, and conclude whether either of these countries is experiencing imbalances".
“A high surplus does not necessarily mean that there is an imbalance," Commission President Jose Manuel Barroso said at a press briefing in Brussels.
"We do need to examine this further and understand whether a high surplus in Germany is something affecting the functioning of the European economy as a whole," Mr. Barroso added.
Last month the U.S. Treasury Department criticized Germany's economic policies in its semiannual currency report, blaming the country’s export led growth model for creating a drag on the recovery in the 17-nation euro bloc and the rest of the global economy.
While the U.S. Treasury acknowledged a rebound in German domestic demand it said German growth “continues to rely on positive net exports, which continues to delay the euro area’s external adjustment process.”
“The net result has been a deflationary bias for the euro area, as well as for the world economy,” the Treasury said.
The International Monetary Fund has also urged Germany to boost domestic demand and reduce its export surplus to help its euro-area partners cut deficits.
Germany has rejected criticism of its economic model, saying that economic growth next year will be driven by domestic demand.
Germany’s current account surplus rose to 7% of gross domestic product in 2012 and has exceeded the EC's threshold of 6% of national GDP each year since 2007, prompting criticism of the country for undermining the recovery in the rest of the euro zone.
The EC said it was launching "in-depth review" of both Germany and Luxembourg “in order to better scrutinize their external position and analyze internal developments, and conclude whether either of these countries is experiencing imbalances".
“A high surplus does not necessarily mean that there is an imbalance," Commission President Jose Manuel Barroso said at a press briefing in Brussels.
"We do need to examine this further and understand whether a high surplus in Germany is something affecting the functioning of the European economy as a whole," Mr. Barroso added.
Last month the U.S. Treasury Department criticized Germany's economic policies in its semiannual currency report, blaming the country’s export led growth model for creating a drag on the recovery in the 17-nation euro bloc and the rest of the global economy.
While the U.S. Treasury acknowledged a rebound in German domestic demand it said German growth “continues to rely on positive net exports, which continues to delay the euro area’s external adjustment process.”
“The net result has been a deflationary bias for the euro area, as well as for the world economy,” the Treasury said.
The International Monetary Fund has also urged Germany to boost domestic demand and reduce its export surplus to help its euro-area partners cut deficits.
Germany has rejected criticism of its economic model, saying that economic growth next year will be driven by domestic demand.