Europe's major industrial power and, until now, most successful economy. Very efficient industry benefits from Germany's low inflation environment. German workers and managers live up to their reputation for hard work, thoroughness and discipline. Strongest sectors are cars, heavy engineering, electronics and chemicals; all have massive export success.
Weaknesses
The east: costs of incorporating out-of-date and massively inefficient ex-communist economy underestimated. Traditionally harmonious labor relations under pressure in recent years. Growing competition from increasingly efficient, low-wage Asian economies.
Profile
West Germany's post-war economic recovery from a war-shattered state to become the world's third strongest economy was remarkable. US aid played its part, but equally important was the thinking behind the "Sozialmarktwirtschaft," or social market economy. This charged the state with providing welfare and ensuring workers' rights, while leaving the economy largely in private hands.
Germany has developed little of the coordinated state and regional planning found in France. All the major banks and businesses are in private hands. One exception is Volkswagen, which is partly state-owned. The central bank, which sets interest rates and is responsible for controlling inflation, also has a large measure of independence from the government.
The greatest challenge for Germany remains rebuilding the east. The state privatization agency, the "Treuhand," has now sold off 8,000 of the formerly East German state-owned concerns. However, millions of east Germans have been made redundant and the cost of welfare benefits has increased considerably. The annual rebuilding costs are now estimated at DM 150 million a year.
