From the financial crisis to the world economic crisis (II). Global imbalances: Cause of the crisis and solution strategies for Germany

Global external imbalances are among the key causes of the current world economic crisis. In the following their relevance will be analysed in detail and it will be shown how they influence the course of the crisis in individual countries. It becomes obvious that Germany is particularly affected due to the great importance of external trade surpluses for growth in this country. A continuation of the one-sided German orientation towards foreign trade cannot be sustainable. Substantial losses of growth and persistent global instabilities would be a threat. For this reason an alternative strategy for a stronger orientation towards domestic markets leading to a balanced and thus sustainable growth is outlined. This IMK Report is the second in a series on the reasons and remedies for the economic crisis (see also: IMK 2009).