iented economy. The German government, however, is intent on
maintaining a manufacturing base in the east and is considering a
policy for subsidizing industrial cores in the region. Eastern
Germany's share of all-German GDP is only 8% and eastern productivity
is just 30% that of the west even though eastern wages are at roughly
70% of western levels. The privatization agency for eastern Germany,
Treuhand, has privatized more than 90% of the 13,000 firms under its
control and will likely wind down operations in 1994. Private
investment in the region continues to be lackluster, resulting
primarily from the deepening recession in western Germany and
excessively high eastern wages. Eastern Germany has one of the world's
largest reserves of low-grade lignite coal but little else in the way
of mineral resources. The quality of statistics from eastern Germany
is improving, yet many gaps remain; the federal government began
producing all-German data for select economic statistics at the start
of 1992. The most challenging economic problem is promoting eastern
Germany's economic reconstruction - specifically, finding the right
mix of fiscal, monetary, regulatory, and tax policies that will spur
investment in eastern Germany - without destabilizing western
Germany's economy or damaging relations with West European partners.
The government hopes a "solidarity pact" among labor unions, business,
state governments, and the SPD opposition will provide the right mix
of wage restraints, investment incentives, and spending cuts to
stimulate eastern recovery. Finally, the homogeneity of the German
economic culture has been changed by the admission of large numbers of
immigrants.
National product:
Germany:
GDP - purchasing power equivalent - $1.331 trillion (1993)
western:
GDP - purchasing power equivalent - $1.218 trillion (1993)
eastern:
GDP - purchasing power equivalent - $112.7 billion (1993)
National product real growth rate:
Germany:
-1.2% (1993)
western:
-1.9% (1993)
eastern:
7.1% (1993)
National product per capita:
Germany:
$16,500 (1993)
western:
$19,400 (1993)
eastern:
$6,300 (1993)
Inflation rate (consumer prices):
western:
4.2% (1993)
eastern:
8.9% (1993 est.)
Unemployment rate:
western:
8.1% (December 1993)
eastern:
15.4% (December 1993)
Budget:
revenues:
$918 billion
expenditures:
$972 billion, including capital expenditur