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Germany: taking a deficit for the team

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Thanassis Stavrakis/Reuters

(Read caption) Greece's Prime Minister Antonis Samaras (R) and Germany's Chancellor Angela Merkel speak before their meeting at the Maximos mansion in Athens, October 9, 2012. Germany is operating at a trading surplus, but it has taken a hit in trade with the more troubled eurozone countries on order to help reduce their deficits, Karlsson says.

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Today Germany published its trade statistics for August. It showed that its overall trade surplus continued to increase, from €7.9 billion in August 2011 to €11.1 billion August this exports increased 5.8% while imports rose only 0.7%.

However, if we look at trade with other euro area countries alone, we can see that last year's surplus of €300 million turned into a €1.1 billion deficit in August this year as exports to the rest of the euro area fell by 3.1% while imports from the rest of the euro area rose 1.1%. The rest of the euro area thus slightly increased its share of German imports while sharply decreasing its share of exports.

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This means that Germany is in fact doing what others have called upon them to do: helping to reduce the deficits of the crisis struck countries in Southern Europe by selling less to and buying more from them. That however doesn't mean that Germany's overall surplus has to fall, it has in fact increased due to rising surpluses both with non-euro area EU countries like Britain and Sweden and to non-EU countries.