Germany racing ahead in the euro zone

Since the introduction of the Euro in 1999 the German economy has left its euro zone colleagues behind when it comes to competitiveness and trade revenue. The New York Times produced a worthwhile article showing that Germany’s balance of payments has gone from a small deficit to a strong surplus, but in the euro zone as a whole the balance of payments position has deteriorated slightly. German competitiveness against the rest of the world was probably helped by the fact that the relatively poor performance of other members of the euro zone held down the appreciation of the euro against other currencies – a weaker euro makes German exports cheaper. The graphs below show the German economy against the major euro economies and the troubled euro economies which were forced to seek assistance. However, since the financial crisis, Ireland has improved its position more than any other country in the euro zone, but both Greece and Portugal have continued to lose ground to Germany.

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