Germany's ballooning trade surplus just hit a new record size

Germany’s exporters just broke another record: The trade surplus for Europe’s biggest economy is now at its highest on record.

In 2014, Germany exported more than it imports by a bigger margin than ever before.

Exports rose 3.4% in December from November, and imports dipped 0.8%. Here’s how Germany’s recent export history looks, according to Pantheon Macroeconomics:

That left Germany’s trade surplus at €21.8 billion ($US24.71 billion) in December alone, and €18.2 billion per month on average for 2014 as a whole, the highest ever.

This might seem like an undoubtedly good thing for Germany, but it’s actually more complicated. Critics say that Germany’s huge trade surpluses aren’t just a result of being a competitive exporter, but that perpetually weak domestic demand is holding imports down.

And that can be damaging for the eurozone as a bloc, because it makes it doubly difficult for harder-hit countries in southern Europe to re-balance. They would ideally be boosting their exports to Germany, the large economy that was damaged least by the financial and euro crises, but the demand simply isn’t there.

Matthew Klein has a great piece over at FT Alphaville, explaining how these sort of imbalances are a big problem for the eurozone.

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