Tue 27 July 2010
Booming exports worry Germany's neighbors
German exports are booming, and it's as if the economic crisis almost never happened. But criticism of Germany's economic model is growing louder as experts call on Germans to stimulate domestic demand. Until recently, German exports were suffering due to the economic crisis, but those days are nearly forgotten, and exports are taking off again. Statistics showed that the country's exports recovered twice as much as expected in May. Goods worth 77.5 billion euros ($100 billion) left Germany's borders, which represents an increase of nearly 30 percent compared to last year.
Exports to outside of Europe, with China, India and Brazil leading the way, have been increasing twice as much as exports headed to European nations. That has some in Europe concerned since Germany's trade surpluses are creating deficits for its neighbors. French Finance Minister Christine Lagarde has said Germany's trade surpluses are due to the minimal salary hikes its workers get and cannot be maintained over the long term. Similar statements have come from the United States, which would like to see Germany do more to boost demand and cut its budget less.
Competitiveness is generally measured by unit labor costs. The European Statistics Office indexed these costs using the year 2000 as its base. Nine years later, the index gives southern European nations a value of about 130, France scored 118 and Germany at 105; showing that most European countries have lost the fight for competitiveness to Germany. And Germany does not see any reason to turn back the clock on gains it has made.
Credit: reuters/dpa/afp/BBC/de-world.de
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