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Germany responsible for 4.8 million jobs in EU

June 16, 2017

Germany has recently been criticized for its large trade surplus. Ever since Donald Trump took up the topic, businesses have been worried. Now a new study takes on these accusations.

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Image: Picture alliance/empics/A. Matthews

According to a new study, the German economy is responsible for 4.8 million European jobs. The paper released on Friday by the Swiss-based consultancy Prognos argues that high demand in Germany does not slow development in neighboring countries, but is an important driving force behind their growth.

The Bavarian Industry Association (vbw) commissioned the report because of the continuing criticism of Germany's current account surplus, which has recently come under fire from Donald Trump.

In 2015, Germany imported goods worth around $620 billion (555 billion euros) from other EU countries. A downturn in the Germany economy would have the effect of lowering economic output across the European Union by 36 billion euros by 2023.

"Our study debunks the myth that German economic competitiveness harms our neighbors," says Bertram Brossardt, head of vbw.

Strong demand for imports

The strength of Germany's industry and its import demands are of particular interest and benefit to neighboring countries. Its main suppliers are the Netherlands, France and Belgium, followed by Italy, Poland and the Czech Republic. The bulk of these imports are to supply industry; only 28 percent are consumer goods.

The report suggests that in Poland alone around 890,000 jobs are directly related to German demand, which is more than any other European Union country.

Additionally, the competitiveness of German industry does not squeeze out companies from other countries, says Prognos. Instead, European economies benefit from German strength. These countries not only sell more products, but also cover their own needs with German products.   

In view of these results, Brossardt urges ending "the fictitious debate about the negative effects of the current German account surplus," adding that "a weaker German economy and industry would not make any other country stronger and thus benefit no one."

A surplus of almost 9 percent

For nearly all EU member states, Germany is the most important or second most important export market, according to Prognos. German demand for imported goods accounts for between 7 and 8 percent of the total gross domestic product (GDP) in countries like the Czech Republic, Slovakia, the Netherlands and Austria, therefore providing hundreds of thousands of jobs.

Germany exports goods and services worth more than $1 trillion a year, but imports much less. This export surplus of nearly 270 billion euros is equivalent to around 9 percent of its economic output, putting Germany in first place ahead of China and Japan. America on the other hand has an export deficit of $478 billion. 

Trade surplus - a problem?

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wen/tr (dpa, vbw)

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