Steady progress is forecast for West German economy
Frankfurt, West Germany
West Germany today has a rather ho-hum economy. But it wasn't always so. ''The period of the economic miracle has disappeared,'' said Dr. Eberhard Dettweiler, senior economist for the Bank fur Gemeinwirtschaft (BFG). Agreed Hansgeorg Kupper, an economist with Dresdner Bank: ''The time of big growth rates is over for the foreseeable future. We are more or less in line with other leading industrial countries.''
During the 1950s and '60s, the Federal Republic's economy was an exciting phenomenon on the world scene. Fueled by Marshall Plan dollars, a flood of skilled workers fleeing East Germany or areas further east, and the needs of reconstruction, the West German economy grew at a real 8 percent annual rate in the '50s and a still handsome 4.7 percent rate in the '60s.
By the 1970s, though, the catch-up period was past. Real gross national product (GNP) - the output of goods and services after removing inflation - grew a more modest 2.8 percent a year.
Now that the 1980s are well started, some of the earlier confidence has faded a little. ''There is a strong structural change in Germany,'' said Dr. Dettweiler, who works for a commercial bank owned by the nation's trade unions. ''The mentality of a lot of the German people has changed.'' Some are more desirous of receiving something from the state, rather than ''building something up.'' Students count on subsidies from the state. Taxes are high, as are costs of social benefits.
Nonetheless, probably most German economists would agree with Dr. Dettweiler when he concludes, ''The chances for the German economy are not so bad.'' Indeed , they expect the French economy to do poorly by comparison, and they are critical of the economic policies of the Socialist-Communist government in Paris.
Economists here point to several favorable developments:
* The West German economy has started to recover. GNP was expected to rise last year, but was actually down about 1.2 percent from 1981, only turning around earlier this year. ''What we have,'' said Dr. Christian Franck, an economist with Commerzbank, ''is a slow, and we hope, long and solid development.'' He's expecting the average 1983 GNP to be about 1 or 1.5 percent above 1982.
As in the United States and the United Kingdom, however, business statistics have been prompting economists to sweeten their forecasts. So there is a suspicion the German recovery might turn out to be more vigorous.
Unlike previous recoveries, the driving force has been domestic demand rather than export sales.
* Inflation is declining. During the 1950s, inflation ran 1.9 percent; during the 1960s, it moved up an average 2.5 percent a year. It peaked at 7 percent in 1973-74 - a horrendous rate to Germans, who were made especially sensitive to rising prices by the hyperinflation they experienced between the two world wars. By last year inflation had dropped to 5.3 percent, and this year forecasts run around 3.5 percent. ''We hope it will be even better in 1984,'' Dr. Franck said.
One reasO MoO such hope is that the nation's most important trade union, the metalworkers, settled for a 3.2 percent raise this year - probably slightly less than the inflation rate. ''This will not hinder the upswing,'' commented Dr. Rudiger Freiherr von Rosen, a top official in the Bundesbank, the nation's central bank.
* The nation has a new coalition government of the conservative Christian Democrats and its sister Bavarian party, the Christian Social Union, and the middle-ground Free Democrats. They solidly defeated the Social Democratic Party in March elections.
This delighted the majority of the business community. ''They have much more confidence in their (the coalition parties') handling of economic and financial problems,'' Dr. Franck said. ''The ideological influence is different; it is not so antibusiness.''
In its spring budget, the coalition government decided on sizable cuts in the country's social welfare spending and a package of tax breaks for business. The government also talks of reducing subsidies to farmers, steel companies, and shipbuilders, among others.
''After years of the state doing too much, it is time to be more moderate,'' Dr. Franck said.
However, there is also a dark side to the West German economy. The worst factor is the high unemployment rate. The percent of the labor force that is jobless is expected to rise to about 10 percent by the end of the year, or 2.5 to 2.7 million - despite the recovery. The country had a surge of babies born in the early 1960s, and these people are now entering the labor force.
German economists hope growing electronics and service sectors will absorb some of those workers cast off by such declining industries as steel and shipbuilding. But they don't expect it to be enough to prevent a further rise in unemployment.
''This is a problem for our new government,'' Dr. Franck noted. A related difficulty is that Germans find it hard to move from one part of the country to another and to change careers.
Another darker aspect of the German economy is the aging of its machinery. Surveys show 40 percent of industrial machinery is more than 10 years old, which may be a surprise to those who imagine Germany as having a vast amount of spanking-new plant and equipment. ''We really need to modernize our machinery,'' Dr. Franck said.
BFG's Dr. Dettweiler expects lower interest rates to encourage business investment in new plant and equipment. ''The government has to do much more to help Germany industry develop new technology and encourage them to do more research and development'' he adds. ''The Japanese government is doing much more than the German government.''
Last, the money supply has been rising far above the targets of the Bundesbank - something that has been happening also in the U.K. and the US. Here , as in the other countries, there is much concern as to whether money growth can be reduced without aborting the recovery. However, it is believed likely that the Bundesbank will not restrain monetary policy until later this summer. Ranked According to Economic Strength 1982 per capita output (in dollars) Conversion based on purchasing power (estimated in part) USA, 13030 Sweden, 12070 Luxembourg, 11690 Switzerland, 11010 Federal Republic of Germany, 10880 Denmark, 10700 France, 10630 Japan, 10340 Austria, 9900 Belgium, 9850 Netherlands, 9760 Great Britain, 8820 Italy, 8460 Spain, 6810 (1981) Ireland, 6010 Greece, 5300 Portugal, 4430 (1981) Courtesy of Press and Information Office of Federal Republic of Germany