East-West German trade prospers
Leipzig, East Germany
France may be capturing attention with a maiden hop of the Concorde from Paris to this week's Leipzig Fair -- but West Germany still leads as East Germany's most vital Western trade partner. The new small and medium-sized West German firms that joined the perennial giants this year in mounting stands at the most important East-West trade fair emphasize the point. So does the rising volume of trade between the two countries.
Last year two-way trade shot up 10 percent, for a total 15.5 billion marks (about $7 billion). The growth was entirely accounted for by West German exports, which increased 23 percent to 7.9 billion marks, while East German exports stagnated at 7.6 billion marks. This lopsided shift basically reflected adjustment from the previous year, when East Germany achieved a 1.3 billion mark bilateral surplus by severely reining in its imports.
It may be hard for East Germany to maintain the same monetary level of exports this year, for two reasons. First, the drop in oil prices sharply reduces income from the 20 percent of East German exports to West Germany that consist of oil products. Second, East Berlin is obligated to raise the volume and quality of its exports to the Soviet Union, and this requirement will cut into the goods it can send West for hard currency.
East-West German trade will not be restrained by any credit problems, however. East Berlin's liquidity was demonstrated last year by the small 28 percent it utilized of the 600 million mark interest-free ``swing'' credit extended by Bonn.