Coronavirus Reduces Germany’s Current Account Surplus

Germany’s surplus fell by USD 13 billion in 2020. “At first glance, this comparatively stable figure gives no indication of the two shifts that lie behind it,” Grimme says. Germany’s traditionally large surplus in trade in goods fell by USD 34 billion, with demand for German goods declining in European countries especially but also in the US and Asia. At the same time, Germans traveled abroad less, which explains why the German deficit in services shrank by USD 22 billion – the lowest it has been since records began in 1971. 

By contrast, the US is traditionally the country with the largest current account deficit. In 2020, this deficit swelled by USD 155 billion to USD 635 billion, or 3.1 percent of US annual economic output – its highest level since 2008. The US is followed by the UK, with a deficit of USD 91 billion (3.6 percent), and France, at USD 64 billion (2.9 percent).

Chinese exporters benefited handsomely from demand for goods related to the pandemic. They sold more electronic equipment, such as computers, as a consequence of more people working from home. In addition, Chinese exports of face masks increased greatly.

For the US, however, net goods exports in 2020 plunged by more than USD 40 billion compared to 2019. Meanwhile, the US’s typical services surplus actually shrank by more than USD 55 billion in response to a dramatic fall in the number of tourists from abroad visiting the country. The US’s traditional surplus in earnings on foreign assets also fell by USD 50 billion, with Americans earning significantly less on securities abroad and income from foreign direct investment falling sharply.