As the world’s largest free-trade area, the European Union can reverse its sharply slowing economic growth in the first three quarters of this year to become an important driver of global demand and output.
Such an outcome depends only on Germany and some smaller countries that account for about a third of the EU economy.
Here’s a quick workout of how that process could unfold.
Imagine that Germany agreed to stop stifling the growth of its closest trade partners by deciding to generate more economic output from its huge wealth — 1.7 trillion euro of net foreign assets at the end of 2017 — accumulated with large trade surpluses.
In practical terms, that would mean the use of Germany’s massive budget surplus of 3.2% of GDP to revive its moribund economy growing at an annual rate of 0.6% in the first nine months of this year — a pace of advance that is less than half of Germany’s potential and noninflationary growth rate.
Read More: https://www.cnbc.com/2019/11/26/europe-could-rev-up-the-world-economy-commentary.html