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Germany's economic advisers reject criticism of current account surplus

[BERLIN] The German government's panel of economic advisers on Monday rejected international criticism of the country's large current account surplus and called US President Donald Trump's protectionist stance a threat to the global economy.

"The German current account surplus is high, but this does not signal a macroeconomic imbalance," Christoph Schmidt, head of the panel of 'wise men' said, adding that demands such as increasing public investment were misleading.

The government should rather make Germany a more attractive investment location for the private sector which would help to reduce the current account surplus, Schmidt said. "The protectionist measures demanded by President Trump pose a threat to the international trading system and a risk to the global economy," the panel of economic advisers said.

The 'wise men' reiterated that they viewed the European Central Bank's monetary policy as "too expansionary" in light of the economic development in the euro zone, adding that the resulting risks for financial stability were rising further. "The ECB should therefore start winding down the bond-buying program as soon as possible," the advisers said.

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The panel slightly revised up their growth forecast for this year by 0.1 percentage point to 1.4 per cent. Adjusted for the fewer number of workdays this year, they expect Europe's biggest economy to grow by 1.7 per cent.

For 2018, the panel predicts a growth rate of 1.6 per cent.