Germany, which accounts for about 28% of the Euro Area’s GDP, is the largest economy in Europe and the fourth largest in the world. In 2016,

Germany recorded the highest trade surplus in the world and in 2017 Germany’s current account (CA) trade surplus amounted to 8% of the country's GDP. As well as being a member of the EU, much of Germany’s trade surplus is derived from countries which share the common Euro currency.

Germany’s huge current account surplus indicates that the country has an excess of national savings compared to its own domestic investment. In Germany’s case, this is less the result of a pure mercantilism, since the steep increase in Germany’s savings seems centered on firms and the government rather than on families.

Underlying Germany’s very successful trade numbers is a decades-old accord between business and unions in favour of wage restraint in order to keep their exports competitive.

This accord has served Germany’s export-led economy well through its postwar recovery and beyond. Basically, this accord helps explain Germany’s transformation since the late 1990s from Europe’s economic sick man to today’s economic growth leader.

In terms of the economic outlook, there has been a spate of downgrades in GDP growth for this year, primarily because of the near-death experience of a two-quarter recession in the second half of 2008, though the 2020 outlook still looks more promising.

Even though global trade tensions, the slowdown in China and Brexit uncertainty cloud Germany’s economic outlook, we are projecting Germany’s economy to expand 0.7% in 2019 and 1.1% in 2020.

Germany’s Current Account Surplus As A % Of GDP