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Germany Economy 1996

Overview:

Five years after the fall of the Berlin Wall, progress towards economic integration between eastern and western Germany is clearly visible, yet the eastern region almost certainly will remain dependent on subsidies funded by western Germany until well into the next century. The staggering $390 billion in western German assistance that the eastern states have received since 1990 - 40 times the amount in real terms of US Marshall Fund aid sent to West Germany after World War II - is just beginning to have an impact on the eastern German standard of living, which plummeted after unification. Assistance to the east continues to run at roughly $100 billion annually. Although the growth rate in the east was much greater than in the west in 1993-94, eastern GDP per capita nonetheless remains well below preunification levels; it will take 10-15 years for the eastern states to match western Germany's living standards. The economic recovery in the east is led by the construction industries which account for one-third of industrial output, with growth increasingly supported by the service sectors and light manufacturing industries. Eastern Germany's economy is changing from one anchored on manufacturing to a more service-oriented economy. Western Germany, with three times the per capita output of the eastern states, has an advanced market economy and is a world leader in exports. The strong recovery in 1994 from recession began in the export sector and spread to the investment and consumption sectors in response to falling interest rates. Western Germany has a highly urbanized and skilled population that enjoys excellent living standards, abundant leisure time, and comprehensive social welfare benefits. It is relatively poor in natural resources, coal being the most important mineral. Western Germany's world-class companies

manufacture technologically advanced goods. The region's economy is mature:

services and manufacturing account for the dominant share of economic activities, and raw materials and semimanufactured goods constitute a large portion of imports.

National product:

Germany:

GDP - purchasing power parity - $1.3446 trillion (1994 est.)

western:

GDP - purchasing power parity - $1.2363 trillion (1994 est.)

eastern:

GDP - purchasing power parity - $108.3 billion (1994 est.)

National product real growth rate:

Germany:

2.9% (1994 est.)

western:

2.3% (1994 est.)

eastern:

9.2% (1994 est.)

National product per capita:

Germany:

$16,580 (1994 est.)

western:

$19,660 (1994 est.)

eastern:

$5,950 (1994 est.)

Inflation rate (consumer prices):

western:

3% (1994)

eastern:

3.2% (1994 est.)

Unemployment rate:

western:

8.2% (December 1994)

eastern:

13.5% (December 1994)

Budget:

revenues:

$690 billion

expenditures:

$780 billion, including capital expenditures of $96.5 billion (1994)

Exports:

$437 billion (f.o.b., 1994)

commodities:

manufactures 89.3% (including machines and machine tools, chemicals, motor vehicles, iron and steel products), agricultural products 5.5%, raw materials 2.7%, fuels 1.3% (1993)

partners:

EC 47.9% (France 11.7%, Netherlands 7.4%, Italy 7.5%, UK 7.7%, Belgium-Luxembourg 6.6%), EFTA 15.5%, US 7.7%, Eastern Europe 5.2%, OPEC 3.0% (1993)

Imports:

$362 billion (f.o.b., 1994)

commodities:

manufactures 75.1%, agricultural products 10.0%, fuels 8.3%, raw materials 5.0% (1993)

partners:

EC 46.4% (France 11.3%, Netherlands 8.4%, Italy 8.1%, UK 6.0%, Belgium-Luxembourg 5.7%), EFTA 14.3%, US 7.3%, Japan 6.3%, Eastern Europe 5.1%, OPEC 2.6% (1993)

External debt:

$NA

Industrial production:

western:

growth rate 2.8% (1994)

eastern:

growth rate $NA

Electricity:

capacity:

115,430,000 kW

production:

493 billion kWh

consumption per capita:

5,683 kWh (1993)

Industries:

western:

among world's largest and technologically advanced producers of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics; food and beverages

eastern:

metal fabrication, chemicals, brown coal, shipbuilding, machine building, food and beverages, textiles, petroleum refining

Agriculture:

western:

accounts for about 1% of GDP (including fishing and forestry); diversified crop and livestock farming; principal crops and livestock include potatoes, wheat, barley, sugar beets, fruit, cabbage, cattle, pigs, poultry; net importer of food

eastern:

accounts for about 10% of GDP (including fishing and forestry); principal crops - wheat, rye, barley, potatoes, sugar beets, fruit; livestock products include pork, beef, chicken, milk, hides and skins; net importer of food

Illicit drugs:

source of precursor chemicals for South American cocaine processors; transshipment point for Southwest Asian heroin and Latin American cocaine for West European markets

Economic aid:

western-donor:

ODA and OOF commitments (1970-89), $75.5 billion

eastern-donor:

bilateral to non-Communist less developed countries (1956-89) $4 billion

Currency:

1 deutsche mark (DM) = 100 pfennige

Exchange rates:

deutsche marks (DM) per US$1 - 1.5313 (January 1995), 1.6228 (1994), 1.6533 (1993), 1.5617 (1992), 1.6595 (1991), 1.6157 (1990)

Fiscal year:

calendar year

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