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Euro's record boost to German surplus

Tuesday, September 15, 2015 - 01:38

Germany's current account surplus is likely to hit a new record of 250 billion euros ($283 billion) in 2015. But as David Pollard reports, it wasn't all good news - another survey showed the mood among German analysts and investors slumped in September to its lowest level in 10 months, hit by fears about slower exports to emerging markets.

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A cheap euro's been good for euro zone exports. Best of all for Germany - their current account surplus is expected to balloon to 250 billion euros this year. Those figures from the influential Ifo think tank would be a new record. Cheaper crude oil imports are also helping. But there is a downside. At over 8 per cent of GDP, the surplus would breach EU recommended thresholds. That could put Berlin in the bad books of not only the European Commission, but also Washington and the IMF. Hargreaves Landsdowne's Richard Hunter. (SOUNDBITE) (English) HEAD OF EQUITIES, HARGREAVES LANDSDOWNE, RICHARD HUNTER, SAYING: ''There have been calls on the basis of its surplus to boost imports and indeed domestic spending to get the situation rather more in balance, but clearly in terms of its exports, its car manufacturing business in particular, that's showing extreme signs of strength at the moment.'' China's slowdown could threaten that strength. Turbulence there and across emerging economies is knocking German investor sentiment. The ZEW institute's monthly reading slumped to 12.1 from 25 in August - its lowest in 10 months. Euro zone growth prospects again in question .... NAB's Nick Parsons. (SOUNDBITE) (English) NICK PARSONS, GLOBAL HEAD FX STRATEGY, NAB, SAYING: ''I don't see it .... beyond 2 per cent, unless there were to be a big and sustained improvement in overall world trade and at the moment the risks would tend to point in the opposite direction.'' Ironically perhaps, China may see its surplus rise to a world-beating 330 billion dollars - a huge 50% rise on last year, according to Ifo. Though that would mainly be due to falling imports as its economy cools, not rising exports.

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Euro's record boost to German surplus

Tuesday, September 15, 2015 - 01:38