The United States is an important trading partner for Germany. However, protectionist policy proposals are a matter of growing concern for German companies.
In this episode of The Zeitgeist, Michael Hüther, Director of the German Economic Institute, joined AICGS President Jeff Rathke and Senior Fellow Peter Rashish to talk about what Hüther calls the end of the second era of globalization and the challenges of shaping the third era of globalization, creating a European and an international framework that is politically sustainable and economically effective.
In contrast to a massive current account deficit against China, the US runs a current account surplus with respect to the European Union. The US-EU surplus is largely driven by a positive service balance and primary incomes originating from US investments abroad. Services and primary incomes overcompensate the US goods trade deficit with the EU. Rather than representing a “rip–off”, the different balances reflect the economies’ different business models.
For several years now the number of listed companies in Germany and other industrialised countries such as the United Kingdom and the USA has been declining, with de-listings significantly outnumbering flotations.
How does the EU Commission’s idea of closer scrutiny of Chinese investments into European companies square with the same Commission’s advocacy in favour of open markets and free movement of capital? It is a delicate balance to strike between intervention and free markets. The EU needs to be careful not to lose credibility and scare away foreign investors which could endanger the many advantages of inflowing foreign direct investment.
After the internet bubble collapsed in 2000, German households have reduced their investments in the stock market. Losses at that time were not so much caused by market volatility, but the consequence of short-term speculation. However, putting savings into the stock market can be very profitable for households, when the investment horizon is sufficiently long.
At this week’s G20, global trade will come into the spotlight. It will present EU leaders with the daunting task of juggling economic sanity and political reality, write Ilaria Maselli and Jürgen Matthes for Euractiv. Ilaria Maselli is a Senior Economist at The Conference Board. Jürgen Matthes is a Senior Economist at the Cologne Institute for Economic Research. They are the co-authors of the new report, Ensuring Accountability in Modern Trade Policy.
The heads of state and government of the seven major advanced nations in the world are currently meeting in Sicily. The main topics at the G7 Summit will be free trade, climate protection and migration policy. The positions of the politicians present differ considerably, progress is hardly possible. Also, because US President Donald Trump misconstrues facts.
Menschenrechte, Gewaltenteilung, Demokratie: Die Werte des Westens erodieren. Ist unser Gesellschaftsmodell am Ende? Nein. Doch die transatlantische Erzählung braucht eine lebenspraktische Übersetzung. Ein Gastbeitrag von Michael Hüther, Direktor des Instituts der deutschen Wirtschaft Köln und Russell Berman, Professor für Geisteswissenschaften an der Stanford University und Senior Fellow an der Hoover Institution.
The German export surplus is heavily criticized by the USA. The German economy ranks first among the EU Member States when measured in terms of the absolute trade surplus. But the picture changes when the economic size of the individual countries is taken into account. Other EU countries, especially Ireland, are also likely to suffer from a new American protectionism.
When Angela Merkel meets Donald Trump on Friday, the elephant in the room will be transatlantic trade. With its export surplus, Germany is the focus of criticism by the US president. Yet, the surplus in the trade balance of other EU countries with the US is higher – after accounting for the size of the economy.
Senior Economist, Head of the Research Group Macroeconomic Analyses and Business Cycles
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Head of the Research Unit International Economics and Economic Outlook
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