The German Current Account: A Comparison of American and European Perspectives and Policies

This paper reviews the components of the current account balance, the historical trends of Germany’s current account, and compares Germany’s current account to others across the world. It then discusses factors contributing to the current account surplus, including savings and investment behaviors, interest rates and the euro, and the gap between exports and imports. After discussing the impact of the surplus on international political relations and the political environment within Germany, this paper then delves into American, European, and German perspectives of the surplus – if it is harmful to the Eurozone and the global economy, and if so, what reforms should be implemented. Finally, this paper forecasts the decline of the surplus over the next decade, and offers analysis of future trade policies in Germany, Europe, and the United States that may impact the current account balance. This paper then offers conclusions and references.