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PASTOR GENERAL'S REPORT, February 6, 1981
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ON THE WORLD SCENE
GERMAN "WIRTSCHAFTSWUNDER" GRINDS TO A HALT
economic growth, West Germany is in trouble.
swunder"--Economic Miracle--has played out.
economy will at best stagnate in 1981. More
shrink by one�ercent.
After decades of remarkable
The fabled "Wirtschaft
The Federal Republic's
likely, Bonn's GNP will
Unemployment, now standing at 1.3 million, could rise during 1981 to its
highest level in 30 years. Inflation, still low by current U.S. and
British standards, has crept up to about six per cent.
The huge balance of payments surpluses of the past are but a fading mem
ory, replaced by what looks to be a succession of mammoth deficits. The
deficit for 1980 was around $16 billion, largest ever for any country.
For 1981, the picture is expected to be only slightly less dismal.
The West German economy's poor showing is reflected in the slumping value
of the deutsche mark, which has lost 20% of its value against the dollar
in the last four months alone. (When I was in Germany in October, the
dollar was worth between 1.75 and 1.80 marks. It was trading in the
first week of February for around 2.15.)
The advent of the Reagan adminis
tration and continued high interest rates in the U.S., sucking in German
investment funds, have also played significant roles in the mark's de
cline. Now, for the first time in West German history, there is even
speculation that the troubled mark could be devalued.
West German officials, including Economics Minister Count Otto Lambsdorff,
have
been warning the German public lately that the days of ease and
plenty are over, at least for now, and that some belt-tightening realism
is long overdue. Particular focus has been placed on the average German's
"wanderlust"--his desire to travel. No other people in the world spend as
much on foreign vacations. The net deficit of tourism to the Federal
Republic's balance-of-payments problem is staggering. Jaunts to the
Mediterranean beaches, skiing in the Alps and more exotic globe-trotting
ventures cost the German economy a staggering OM 37 billion ($19 billion)
in 1980. Since foreign tourists spent only about OM 12 billion ($7 bil
lion) in West Germany in return, that left a deficit of OM 25 billion-
accounting for nearly all of Bonn's balance of payments deficit of OM 28
billion.