Germany has maintained a large current
account surplus throughout the euro area financial crisis, and in 2012, Germany’s nominal
current account surplus was larger than that of China. Germany’s anemic pace of domestic
demand growth and dependence on exports have hampered rebalancing at a time when many
other euro-area countries have been under severe pressure to curb demand and compress imports
in order to promote adjustment. The net result has been a deflationary bias for the euro area, as
well as for the world economy.