Welcome to the Utopia Forums! Register a new account
The current time is Sun May 20 08:58:36 2018

Utopia Talk / Politics / German record exports in 2017
Daemon
Member
Thu Feb 08 03:55:40
But imports rose even stronger, so everybody should be happy

http://abc...rcent-2017-hit-record-52924964

German exports up 6.3 percent in 2017, hit record

By The Associated Press

BERLIN — Feb 8, 2018, 4:05 AM ET

Germany's exports increased by 6.3 percent in 2017, beating the previous year's record, authorities said Thursday. Imports rose by an even stronger 8.3 percent, also hitting record levels.

Europe's biggest economy exported goods worth 1.279 trillion euros ($1.577 trillion) last year, the Federal Statistical Office said. It didn't give a detailed geographical breakdown of the destinations, but said that exports to both European Union countries and nations outside the 28-nation bloc were up 6.3 percent. Exports to the EU, at 750 billion euros, accounted for well over half the total.

Germany's imports swelled to 1.035 trillion euros, with goods from outside the EU gaining a little more strongly. EU imports totaled 682.5 billion euros.

Exports have long been a mainstay of the German economy, though strong domestic demand has taken over as the main driver of economic growth. Germany's export strength has brought the country criticism from abroad.

Germany's trade surplus last year came in at 244.9 billion euros, down from the previous year's record of 248.9 billion euros, the statistical office said.

"The discussion about the German trade surplus should ease up" because imports rose faster than exports, said the director general of the Federation of German Industries, Joachim Lang.

He said that "protectionism, a disorderly Brexit and the loss of confidence in free trade and open markets remain dangers" and called on politicians to secure Germany's success on global markets — in particular by quickly ratifying an EU-Canada trade deal and concluding trade negotiations with Mexico and South America's Mercosur bloc.

In December, German exports edged up 0.3 percent compared with the previous month in seasonally and calendar-adjusted terms, while imports were up 1.4 percent.
jergul
large member
Thu Feb 08 04:51:30
The numbers do actually look quite nice. A slight intra-EU surplus is fine, though ultimately it should trend closer to 0. But it might be the case if we included remittances to balance (German imports from Greece + remittances from Germany to Greece - exports to Greece = 0).
Rugian
Member
Thu Feb 08 10:08:29
Keep on plundering your EU partners Germany. I can't wait for when the next global recession hits and Europe finally loses patience with German economic policy. Its gonna be great.
jergul
large member
Fri Feb 09 03:39:08
Ruggy
Point of order. The link documents lack of plunder.
Seb
Member
Fri Feb 09 06:51:16
Jergul:

Not necessarily. As the economic core, German growth being export led and running surpluses with rotw pushes up the value of the Euro, decreasing viability of exports elsewhere.

Couple tat with German monetary and fiscal policy that insists weaker peripheral states should export their way to growth and you have a hideously inconsistent set of policies that suppress the periphery.

It's not quite as bad as the previous running of huge surpluses from within the Euro zone, but it's still deeply problematic.

Either Germany needs to import more, or recognise the idea that the eurozone as a whole can be solved by export led growth is not viable and other approaches are needed.
jergul
large member
Fri Feb 09 10:29:05
Seb
The euro is undervalued if anything. The core German problem is excessive saving levels. Euro-zone policy has punished savings harshly.

Realistically, the best way to grow relative to Germany is through population growth.

http://en....ies_by_population_growth_rate.

We can see that German import growth is against the backdrop of a falling population. Lets see savingsrates:

http://tradingeconomics.com/germany/personal-savings

Though remarkably - lower than the Eurozone average (9% to 12%).

I am thinking the key problem is excessive saving levels giving lethargic growth compared to countries where savings is far lower.

Stands to reason. Consumer spending being by far the greatest contributor to gdp.
Dukhat
Member
Fri Feb 09 14:23:36
You expect Rugian to say anything other than the knee-jerk ignorant reaction of an unemployed white retard?

And I know he might have a job. He had to stay and keep it even though he was "betrayed" and now he vents even more on here.
Dukhat
Member
Fri Feb 09 14:27:26
Seb's ideas are interesting in a vacuum and in a scholarly, intellectual way.

The important fact is that Germany produces crap people want along with value-added manufacturing processes and services people want.

It's cute to say other countries should export more but what do the PIIGS countries produce that people want? Their competitive advantage is being tax havens and giving cheap access to the EU. You think Greece will suddenly make air conditioners people want to buy?

That being said, the EU should have a more balanced policy not so dominated by the demands of German Pensioners. They should move towards helping other countries establish a stronger economy based on exports but that won't happen until these countries are allowed to at least depreciate their currencies a bit vis-a-vis the rest of Europe.

Not going to happen. And so we get the general malaise of Europe where insurgent right-wing parties threaten the status quo.

The EU currency simply came too early. It should have come 50 years later after wages and physical/human capital levels had converged between the periphery and core of Europe.

Seb
Member
Fri Feb 09 16:21:29
Dukhat:

1. Indeed, yes, they can't export at the level Germany does. Though they can still: agricultural products, tourism - not strictly an export but similar - Ireland does some good luxury exports as does Spain. Italy actually does export a signficant volume of manufactured goods: sports cars, espresso machines etc.

But this is rather my point - the futility of German ordoliberalism being imposed on the PIIGS and the rest of Europe becomes increasingly clear when you consider overall trade balances.

Repeat after me: the purpose of exports is to pay for imports. Earning foreign currency is no good, you can't pay your workforce in dollars. So you need to sell your dollar (or whatever) earnings from exports and buy Euros. The only people with Euros who want to buy dollars are people who are either cashing out of the EU, or more likely, European people wishing to buy something priced in dollars.

If you are exporting your way to growth, by definition you must be running up a surplus: it would mean either you need to recycle f-ex into foreign investment (which tends to fuel credit gluts, bubbles and loss of value in the medium to long term) or import more in which case your trade should come into balance.

Or to put it another way, you might as well not bothered with exporting, and instead just focused on increasing productivity. The only *real* growth from exporting is by permitting greater focus on things you are more productive than others, and using that to pay to import goods or services that others can produce far more efficiently than you can. I.e. the growth simply comes from improved productivity - not exports.

You can square this circle if you are a small economy, but the Eurozone is the largest economic entity in the world. It cannot run export led growth without fucking up the world economy pretty quickly.

German ordoliberalism and export led growth is not a viable growth strategy for the Eurozone, and the very success of Germany as a global exporter makes it that much more unfeasible an approach for the periphery.

These are not dry academic ideas - they are essential for understanding the economic history of the Eurozone.
Seb
Member
Fri Feb 09 16:23:05
Also you miss the point.

Germany's economic policies are not consistent with convergence. As long as Germany seeks export led growth, the periphery cannot and will not converge on Germany.
jergul
large member
Sat Feb 10 04:11:27
Remittances have to be quantified in the same way as tourism. People going abroad and sending money home.

For the EU as a whole - growth should and can be fuelled by lower savings rates. Ie not recycling into foreign investment (the argument - creates credit gluts is non-sensical in an qualitative easing environment. The investors of last resort should cut back on liquidity before private savers have any fiscal responsibility in that area).

Looking at what a better balance between production and consumption means - Who exactly will have to either produce more, or consume less to balance the books?

http://en....ies_by_current_account_balance

Well, brexit should help the UK lower its consumption for better balance. The other major one? 12.5 by 2020 should fit the ticket.
Seb
Member
Sat Feb 10 05:37:43
Actually QE makes sense in that context.

Demand being fueled by cheap credit, then private credit dries up due to low risk tolerance. QE steps in because the low aggregate demand in surplus counties and the economic activity in the deficit one requires cheap credit.

Seb
Member
Sat Feb 10 06:06:25
Btw, saying "reduce savings rates" for Germany amounts to the same thing I'm saying.

"Export led growth" - piling up cash from large persistent trade surplus - needs to end. This should lead to increased consumption internally which means more capacity consumed locally rather than exported, or greater imports.
Seb
Member
Sat Feb 10 06:07:21
Policies designed to create persistent trade surpluses are going to involve generating high savings.
jergul
large member
Sat Feb 10 08:42:29
Seb
Excessive savings is the core problem that is expressed in trade and balance surpluses.

Cart-horse. I like the horse in front.

Other countries in the EU are actually worse than Germany. Eurozone average of 12% compared to Germany's 9%. For private savings. However, public debt accumulation helps even out the load most elsewhere.

QE makes sense, but when speaking of bubble creation, then look first at that, before looking at private savings rates. You were arguing excessive liquidity remember.
Seb
Member
Sat Feb 10 09:04:09
Jergul:

In the case of Germany, the horse is a set of economic and social policies and culturaly ingrained view of the economy that deliberately seeks to generate a trade surplus as a means of GDP growth.

That will inevitably have the side effect of increasing the savings rate.

That's the horse right there.
Seb
Member
Sat Feb 10 09:05:30
Btw Daemon, if German exports were matched with imports, that'd be great.
jergul
large member
Sat Feb 10 09:17:43
You horse has way to many caveats attached to be anything but a cart.

Boy smartest man in the room syndromes are fun.
Seb
Member
Sat Feb 10 14:46:10
Jergul:

No caveats Jergul. German saving rates are a consequence of a suite of policy choices designed to deliver a trade surplus in the mistaken belief that this delivers sustainable growth.

Those policies are the horse. Excessive savings follow. Unwind those policies, savings will fall, demand will rise.
jergul
large member
Sat Feb 10 15:02:58
Seb
You are harnessing plural "policies" to a single "horse".

And misidentifying the problem to boot. It is not excessive german exports. The issue is insufficient German consumption. Due to savings and not for example due to lack of purchasing power.

Or you could reframe it entirely and state that German exports is due to insufficient savings in its largest trading partners.

The main thing is that the huge inbalances we saw in earlier years has unwinded. What was truer then is not very true now.


jergul
large member
Sun Feb 11 04:37:32
It is important to identify the core problem because it gives a different array of contributing solutions.

*Continued support to increase birthrate
*Continued support to increase immigration
*Continued support to enhance low incomes
*Increase gov spending towards 47% of Gdp

Problem solved.
Seb
Member
Sun Feb 11 05:38:26
Jergul:

In the sense those policies are levers stemming from an explicit economic and industrial strategy, singular or plural isn't a key distribution. A team of horses then. Either way, it's them pulling the cart!

Insufficient German consumption is a consequence of those policies.

It's simple, in the 1990s and 2000s, Germany was in a bit of a funk. They identified running a trade surplus as key to growth.

You see policies like Hartz IV and other reforms designed to hold the cost of labour down to ensure competetive manufacturing and boost exports of goods. At the same time, liberalisation of services in the common market has been resisted.

The intent is trade surplus (nobody would have an issue with strong exports if matched with strong imports), which can only be delivered if imports are lower than exports. But equally, holding down wage growth to boost exports will inevitably have the impact of reducing consumption.

I don't think you can say the problem with German exports is insufficient savings in deficit counties. The result of that would simply be depression. Low interest rates, but also low demand, so no clear opportunities for investment. Demand has to come from somewhere, but if your economic core is holding down demand through policies designed to generate a trade surplus, your fucked.

And yes, it's unwound a fair bit - we started on that point - but the fundamental sustainability of Germany's economic strategy in the Euro (let alone as a model for Eurozone as whole) still remains.
Seb
Member
Sun Feb 11 05:39:11
I don't think we are really disagreeing here.
Seb
Member
Sun Feb 11 05:42:25
Another point on increasing savings rate in the periphery:
1. What are the tools to do that? Interest rates, capital controls and trade barriers re not available. Wage controls heavily constricted and counter productive if boosting GDP and tax take is the goal.
2. It's going to make matters worse as it will surpress local demand.

Indeed, that's the whole point about Austerity being bad mmmkay.
jergul
large member
Sun Feb 11 13:42:43
Seb
German savings dates back to 1960 or as far as statistics exist.

I think the global imbalances can neatly be summarized as insufficient saving rates in high deficit countries. Compounded more often than not by high deficit spending rates.

It leads to unfunded future liabilities. My personal view is that 4% is about on target (so 2% or thereabouts after inflation).

Savings rates in the periphery are higher than in Germany. I am drawing the distinction between private savings rates and public spending (as noted earlier).

I do not consider excessive savings a desirable feature at all. mmmkay.

Seb
Member
Sun Feb 11 15:37:01
Jergul:

Knackered so will return to this.

Mmmkay was intended to denote a shared agreement that austerity is dumb. I was aiming for light hearted but may have accidentally achieved condescenion instead.
jergul
large member
Mon Feb 12 01:49:14
It was close to light-hearted. But I landed on feeling misunderstood (Both of us are staunch Keynsians I think. Even on the cutting back public spending when growth is good part). I might have been overly sensitive.

High periphery savings seem to support my earlier thoughts that PIGs issues relate to informal economies more than anything else.

Too much of the economy is not subject to taxation and that gives odd effects.
jergul
large member
Wed Feb 14 06:18:49
http://ec....c0-bb55-4a22-b8ea-d50d5a92586d
patom
Member
Thu Feb 15 05:55:21
Daemon, Congrats to your German Pairs skaters. Been watching skaters most of my life and have never seen a single most flawless performance as that. They truly deserved their Gold Medal performance.
show deleted posts

Your Name:
Your Password:
Your Message:
Bookmark and Share