Report
Countries that have excess savings over investment do not warrant optimism
C ountries that have excess savings over investment (we look at the example of Germany) do not warrant optimism . While these countries are immune from balance-of-payments crises: If the excess savings over investment result from a very high level of savings, domestic demand will be structurally weak, discouraging domestic investment over time or making it dependent on exports; If the excess savings over investment result from a low level of investment, potential growth will be weakened; the country’s savings finance investment s abroad and not in the country, leading to a loss of long-term growth; Excess savings over investment normally lead to a n overvalu ed real exchange rate, leading to deindustrialisation. T his is not the case in Germany due to its euro - zone membership .
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Natixis
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Patrick Artus
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