By Michael Nienaber and Rene Wagner
BERLIN (Reuters) – Germany’s current account surplus shrank for the fifth year in a row in 2020 as China overtook Europe’s biggest economy during the COVID-19 pandemic to run the world’s largest current account surplus, a survey by the Ifo institute showed on Friday.
The data underlines a tectonic shift in world trade triggered by the coronavirus crisis as higher demand across the globe for medical protection gear and electronic devices boosted Chinese exports.
The Munich-based Ifo institute said China’s current account surplus, which measures the flow of goods, services and investments, more than doubled to $310 billion last year.
Germany’s current account surplus shrank to $261 billion in 2020 as demand for cars, machinery and equipment fell in many of its key export markets, the survey showed. Japan came in third with a current account surplus of $158 billion.
Measured in relation to economic output, however, Germany’s current account surplus remained unusually high at 6.9% last year, edging down only slightly from 7.1% in 2019.
Since 2011, Germany’s current account balance has been consistently above the European Union’s indicative threshold of 6%. The surplus hit a record high of 8.6% in 2015.
By comparison, China’s current account surplus last year stood at 2.1% and Japan’s at 3.2%, according to the survey.
The United States remained the country with the world’s largest current account deficit which rose roughly by a third to $635 billion in 2020 or 3.1% of economic output, it showed.
This suggests that former U.S. President Donald Trump failed to push down the trade deficit despite his ‘America First’ agenda of protecting industrial jobs by increasing import tariffs on foreign goods.
Ifo economist Christian Grimme said pandemic-related restrictions on travel and tourism pushed Germany’s traditionally high deficit in services to a record low.
“In the past year, Germans took a lot less vacation abroad due to the coronavirus,” Grimme said. As a result, they spent significantly less money in other countries like Spain, Italy or Greece.
(Reporting by Michael Nienaber, editing by Emma Thomasson)
