Is Navarro right about Germany and the trade surplus?

There is a pattern. Someone - the European Commission, or some economist - accuses Germany of running an excessive current account surplus.

If there is a response at all, it is always the same: Germany is not too strong, the others are too weak. More structural reforms, please. And this is it. 

Germany does not engage in a dialogue with anybody over the conduct of its own economic policy. Nor has Germany taken any unilateral action on its now 9% current account surplus. 

Are his criticisms justified? There is a tendency to denounce everything the Trump administration does or says after the recent blitz of executive orders. But, on this point, we would agree with them.

Germany runs an obscenely large current account surplus.

It has imposed deflationary policies on the eurozone, as a result of which the eurozone as a whole runs a current account surplus of over 3 per cent, very large for an economy that size. 

There is a case for a very large appreciation of the euro, but the diverging monetary policies between the Fed and the ECB make that impossible. 
Furthermore, there is no hope that Germany will 

agree to a change in the EU's fiscal rules, let alone on its own constitutional balanced-budget law, which is one of the deep causes behind the ballooning surplus. 

So yes, the criticism is fair.

Eurointelligence 1 February 2017

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