GERMAN GROWTH MODEL UNDER ATTACK

The new German government's pledge of a national minimum wage and an additional 23 billion euros (31.2 billion dollars) spending by 2017 on investment in infrastructure, education, research and development is welcomed because it would spur domestic demand and provide stimulus to the sluggish economies of its European neighbors.

It is hoped that higher wages and more investment would make the economic growth be driven more by internal demand forces and Germany would import more goods and services from its neighbors.

The coalition partners'pledge came against the backdrop that Germany had been under fire from both the United States and the European Commission on charges that the country's economy is excessively export-oriented and it fails to stimulate domestic demand to help the eurozone emerge from its financial crisis.

The surplus in the Europe's largest economy, which stood at 45.9 billion euros (61.7 billion dollars) in the second quarter of this year, caused criticism from abroad, especially from crisis countries that called on Germany to spend more in order to stimulate economies in its European fellow countries.

Berlin's critics quoted statistics from the European Commission that Germany recorded a three-year average surplus of 6.5 percent of GDP, and the surplus was expected to remain above the 6 percent threshold that the European Commission considers excessive until 2015.

Meanwhile, German official statistics have shown recently that trade surplus registered a record high in September, hitting 20.4 billion euros (27.3 billion dollars). German exports to other EU countries in the month had the largest increase of 5.4 percent.

The high level of surplus in Germany has sparked criticism from its EU peers, who urged Berlin to encourage wage growth and more spending at home to help growth in its European trade partners and the 17-country euro currency union as a whole.

The EU complained that exports of the bloc's biggest economy weighed on balance sheets of its neighboring countries and therefore has launched an investigation into whether Germany's huge trade surplus is threatening the rest of the bloc. The result of the "in-depth review" of the German economy will be published next spring.

Germany, meanwhile, has rejected such criticism, saying other countries should make their economies more competitive and Europe should focus on competing with other regions.

Merkel has defended her country's trade surplus, saying that it was "absurd" to suggest German companies should cut their production or that wages in the export sector should be higher to weaken their competitive strengths.

"This cannot be in the interests of a successful Europe," Merkel said at a conference with industry leaders in November, adding that Germany's current economic growth rate was almost entirely driven by domestic demand.

The German economy increased by 0.3 percent in the third quarter. Gross domestic product in the eurozone, Germany's biggest export market, rose by 0.1 percent during the same period.

The German government has forecast the Europe's largest economy to expand by 0.5 percent this year, and by 1.7 percent in the next, with domestic demand considered as the main driving engine.

Recent surveys have shown that German investors' confidence for the outlook of the country's economy and German consumer sentiment have both hit new highs, thanks to an improvement of the eurozone's economic outlook and a stable jobs market, while low interest rates make saving less attractive.

The GfK market research group said in a recent survey that German consumer sentiment rose to its highest in six years as the traditionally German savers are increasingly willing to spend. The German Council of Economic Experts also predicted in its annual report in November that German consumer spending will rise by 1 percent this year.

With Christmas around the corner, consulting firm Ernst & Young predicted that the average German will spend 273 euros on Christmas presents this year, 43 euros more than last year. It's good news for both Germany and Europe.