Germans defend exports as US Treasury's Lew visits

BERLIN — Germany's finance minister dismissed criticism of his country's export strength as his US counterpart pressed for Europe's biggest economy to do more to fuel domestic demand.

Germany has long faced criticism from the US and others for relying too heavily on its exports and, some contend, not importing enough to boost other economies in Europe.

US Treasury Secretary Jacob Lew was visiting Berlin, part of a trip that also includes France and Portugal, as official data showed Germany's trade surplus widening further.

"We continue to believe that policies that would promote more domestic investment and demand would be good for the German economy and the global economy," Lew told a news conference after meeting German Finance Minister Wolfgang Schaeuble.

Chancellor Angela Merkel's weeks-old government, an alliance of right and left, is planning to introduce a national minimum wage and invest in infrastructure. But it is broadly keeping unchanged its approach to Europe's debt crisis, in which it has made cutting budget deficits a priority.

Lew stressed the importance of "getting the balance right" between promoting short-term growth and getting public finances in order, and said that policy decisions by Germany's new government "are consistent with that approach."

Germany's Federal Statistical Office reported a trade surplus for November of 17.8 billion euros ($24.2 billion), up from 16.7 billion the previous month. Exports rose 0.3 percent to 93.2 billion euros when adjusted for seasonal and calendar factors, while imports declined 1.1 percent to 75.4 billion euros.

German officials have little time for criticism of the country's export performance. Schaeuble noted that Germany's economic growth has been driven mainly by domestic demand recently.

"The eurozone as a whole has a very small surplus .... and without the German surplus toward third countries, the eurozone would have no surplus at all, but a deficit," Schaeuble said. "The American deficit won't be improved by a European one being added to it."

Alongside criticism from the US, the International Monetary Fund has said a smaller surplus is the only way to even out the imbalances that plague the eurozone.

Chris Williamson, chief economist at Markit, cautioned that any German move to emphasize exports less may not have the positive effect on the eurozone that some expect.

"Stronger German export gains, especially to non-euro countries, helps boost business activity at companies within the euro area that are suppliers to German firms," he said.

German and European economic growth are expected to pick up this year after the eurozone emerged from a lengthy recession. Separate data released yesterday showed that German industrial orders were up 2.1 percent in November, following an equivalent decline the previous month.

Orders from inside Germany increased by 1.9 percent, while demand from other countries in the eurozone was flat and orders from countries outside the currency area climbed 3.5 percent.

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