IMF: German trade surplus contributes to trade tension

International Monetary Fund’s (IMF) Chief Economist Maury Obstfeld wrote about the how the German trade surplus is contributing to the trade tensions, in a guest commentary published in German daily Die Welt on Monday.

Key Quotes:

“In (current account) surplus countries such as Germany we see hesitant measures, at best, to counteract the surplus.”

“Countries like the United States, in which the external current account balance is too low, should reduce budget deficits, encourage households to save more, and gradually normalize their monetary policy.”

“The net external positions will diverge more. That increases the risk of disruption by currency or asset price adjustments in indebted countries, to the disadvantage of all.”

“If there is a sudden adjustment, then both the debtor and creditor countries will suffer.”