April 11, 2019 / 8:20 PM / 2 months ago

German budget, C/A surpluses damaging to euro zone -Moscovici

WASHINGTON, April 11 (Reuters) - Germany’s double fiscal and external surpluses are an imbalance that is damaging to the euro zone and not sustainable in the long run, European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Thursday.

Speaking at the Peterson Institute on the sidelines of the International Monetary Fund’s meetings in Washington, Moscovici called on Berlin to spend more on investment.

“Germany is a country with fiscal surpluses now. And with huge external surpluses. So it has huge capacities to finance more investment, for the country itself and for the sake of the euro zone,” Moscovici said.

“It is not about creating inflation, just about financing necessary investment and growth for them and for us,” he said.

Germany had a current account surplus of 7.8 percent of GDP last year and the Commission is forecasting the surplus will ease to 7.3 percent this year.

Germany’s fiscal surplus was 1.6 percent of GDP last year and is to be 1.2 percent this year, according to the Commission.

Despite these surpluses German public investment was 2.4 percent of GDP last year and will remain stable this year, below the euro zone average of 2.7 percent, the Commission forecasts.

“You cannot have forever that kind of imbalances of something like 8-9 percent of GDP in external surplus plus 0.5-1.5 percent of fiscal surplus,” Moscovici said.

“This is not something that in the long run is sustainable, it creates an imbalance which is damaging to the whole of Europe and euro zone,” he said. (Reporting By Jan Strupczewski; Editing by Andrea Ricci)

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