Germany 'must rely less on trade'

Lesley Curwen
Presenter, Business Daily, BBC World Service

Mr Steinbrück suggested Germany should build up its service sector

The German Finance Minister Peer Steinbrück has told the BBC that Germany must begin to reduce its dependence on foreign trade.

Germany was ranked by the World Factbook as the biggest exporter in the world last year.

But the downturn in global trade caused by the credit crisis has hit it hard.

The German government expects the country's economy to contract by 6% this year, largely because of very steep falls in exports.

Some economists have argued that Germany had relied far too heavily on foreign trade, which made it rich in the boom times but left it vulnerable to a global crisis.

Its finance minister Peer Steinbrück has now admitted in an interview with the BBC that the current balance between foreign and domestic markets must start to change.

Promoting services

"We have to strengthen our internal, our domestic demand in Germany... to reduce this dependency on foreign trade," he said.

He suggested that the service sector would have to be promoted and that education and training should be given to young people to meet the needs of Germany's ageing population.

But Mr Steinbrück remained very cautious about the size of the change. At present, 45% of the country's earnings comes from international trade.

He would not be drawn on how much that might be reduced. "I can't figure out a concrete number," he said. "That would be crazy."

And he emphasised that he still wanted Germany to remain in the "Champions' League" of exporters.

Asked whether the bottom of the economic cycle had now been reached, Mr Steinbrück shrugged his shoulders and said nobody knew.

"If you can find someone who knows," he said dryly, "give me his number."

He suggested that some indicators pointed to things getting a little bit better, but warned that the world still faced very unsafe times.