Are Germans wasting their savings abroad? CEPS Commentary, 7 April 2016

Busse, Matthias and Gros, Daniel. (2016) Are Germans wasting their savings abroad? CEPS Commentary, 7 April 2016. [Policy Paper]

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Abstract

Germany is running a current account surplus of about 8% of GDP, which means that about one-third of all German savings (equal to 24% of GDP) has to be invested abroad every year. It has become by now almost a cliché that these huge excess savings are being wasted abroad. But this is a popular misconception based on the divergence between the available data on the (cumulated) current account balance (cCAB) of Germany and its net international investment position (NIIP). A closer look at the data actually suggests that the NIIP is probably not measured correctly and that the observed returns on German investment abroad have remained above most domestic returns.

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