Overview: The newly unified German economy presents a starkly contrasting picture. Western Germany has an advanced market economy and is a leading exporter. It experienced faster-than-projected real growth largely because of demand in eastern Germany for western German goods. Western Germany has a highly urbanized and skilled population which enjoys excellent living standards, abundant leisure time, and comprehensive social welfare benefits. Western Germany 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: manufacturing and service industries account for the dominant share of economic activity, and raw materials and semimanufactured products constitute a large proportion of imports. In 1989 manufacturing accounted for 31% of GDP, with other sectors contributing lesser amounts. In recent years, gross fixed investment has accounted for about 21% of GDP. In 1990 GDP in the western region was an estimated $16,300 per capita. In contrast, eastern Germany's obsolete command economy, once dominated by smokestack heavy industries, has been undergoing a wrenching change to a market economy. Industrial production in early 1991 is down 50% from the same period last year, due largely to the slump in domestic demand for eastern German-made goods and the ongoing economic restructuring. The FRG's legal, social welfare, and economic systems have been extended to the east, but economic restructuring--privatizing industry, establishing clear property rights, clarifying responsibility for environmental clean-up, and removing Communist-era holdovers from management--is proceeding slowly so far, deterring outside investors. The region is one of the world's largest producers of low-grade lignite coal, but has few other resources. The quality of statistics from eastern Germany remains poor; Bonn is still trying to bring statistics for the region in line with West German practices. The most challenging economic problem of a united Germany is the reconstruction of eastern Germany's economy--specifically, finding the right mix of fiscal, regulatory, monetary, and tax policies that will spur investment in the east without derailing western Germany's healthy economy or damaging relations with Western partners. The biggest danger is that soaring unemployment in eastern Germany, which could climb to the 30 to 40% range, could touch off labor disputes or renewed mass relocation to western Germany and erode investor confidence in eastern Germany. Overall economic activity grew an estimated 4.6% in western Germany in 1990, while dropping roughly 15% in eastern Germany. Per capita GDP in the eastern region was approximately $8,700 in 1990.

GDP: $1,157.2 billion, per capita $14,600; real growth rate 1.7% (1990)

Inflation rate (consumer prices): West--3.0% (1989); East--0.8% (1989)

Unemployment rate: West--7.1% (1990); East--1% (1989); 3% (first half, 1990)

Budget: West--revenues $539 billion; expenditures $563 billion, including capital expenditures of $11.5 billion (1988); East--revenues $147.0 billion; expenditures $153.4 billion, including capital expenditures of $NA (1988)

Exports: West--$324.3 billion (f.o.b., 1989); commodities--manufactures 86.6% (including machines and machine tools, chemicals, motor vehicles, iron and steel products), agricultural products 4.9%, raw materials 2.3%, fuels 1.3%; partners--EC 52.7% (France 12%, Netherlands 9%, Italy 9%, UK 9%, Belgium-Luxembourg 7%), other West Europe 18%, US 10%, Eastern Europe 4%, OPEC 3% (1987); East--$32.4 billion (f.o.b., 1989); commodities--machinery and transport equipment 47%, fuels and metals 16%, consumer goods 16%, chemical products and building materials 13%, semimanufactured goods and processed foodstuffs 8%; partners--USSR, Czechoslovakia, Poland, FRG, Hungary, Bulgaria, Switzerland, Romania, EC, US (1989)

Imports: West--$247.7 billion (f.o.b., 1989); commodities--manufactures 68.5%, agricultural products 12.0%, fuels 9.7%, raw materials 7.1%; partners--EC 52.7% (France 12%, Netherlands 11%, Italy 10%, UK 7%, Belgium-Luxembourg 7%), other West Europe 15%, US 6%, Japan 6%, Eastern Europe 5%, OPEC 3% (1987); East--$30.0 billion (f.o.b., 1989); commodities--fuels and metals 40%, machinery and transport equipment 29%, chemical products and building materials 9%; partners--USSR and Eastern Europe 65%, FRG 12.7%, EC 6.0%, US 0.3% (1989)

External debt: West--$500 million (June 1988); East--$20.6 billion (1989)

Industrial production: growth rates, West--3.3% (1988); East--2.7% (1989 est.)

Electricity: 133,000,000 kW capacity; 580,000 million kWh produced, 7,390 kWh per capita (1990)

Industries: West--among world's largest producers of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics; food and beverages; East--metal fabrication, chemicals, brown coal, shipbuilding, machine building, food and beverages, textiles, petroleum

Agriculture: West--accounts for about 2% 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; fish catch of 202,000 metric tons in 1987; East--accounts for about 10% of GNP (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; fish catch of 193,600 metric tons in 1987

Economic aid: West--donor--ODA and OOF commitments (1970-89), $75.5 billion; East--donor--$4.0 billion extended bilaterally to non-Communist less developed countries (1956-88)

Currency: deutsche mark (plural--marks); 1 deutsche mark (DM) = 100 pfennige

Exchange rates: deutsche marks (DM) per US$1--1.5100 (January 1991), 1.6157 (1990), 1.8800 (1989), 1.7562 (1988), 1.7974 (1987), 2.1715 (1986), 2.9440 (1985)

Fiscal year: calendar year

NOTE: The information regarding Germany on this page is re-published from the 1991 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Germany Economy 1991 information contained here. All suggestions for corrections of any errors about Germany Economy 1991 should be addressed to the CIA.