West Germany, too, bears the mark of inflation

The rising cost of energy finally has caught up with the West Germans, too. For years, the German mark appreciated steadily against the rest of the world's currencies, keeping pace with the increasing prices of imported oil.

Behind that windbreak, the Germans enjoyed spectacularly low rates of inflation and of unemployment. The bellwether automobile industry boomed. German offices and homes remained as warm as ever -- some thought warmer.

But now that has changed.

With the dollar, and sterling, steadying and then improving against the mark for the last six months or so, the West Germans suddenly see their windbreak breached. Cold gusts from the Persian Gulf now chill them, too.

Item: This winter, light heating oil costs more than double what it did a year ago.

Item: During the same period, gasoline prices went up by more than 15 percent.

Item: Consumer prices rose during 1979 by an average 4.1 percent, compared with an average increase of 2.7 percent the previous year. The federal ministry for economics attributes 8/10ths of the difference directly to increased heating oil and gasoline prices.

Once convinced of their exposure to the energy price crisis, the West German acted quickly.

Sales of new cars, still rising during the first half of 1979, plummeted during the second half. Registration of new cars was down for the year by 3 percent, and expected to fall another 10 percent this year.

Furthermore, sales of heavy medium-range cars dropped by as much as 25 percent, as buyers switched to the smaller gas savers.

But sales of luxury cars remained stable. Apparently anyone who can afford to buy a luxury limousine can afford to buy fuel for it. During the gray winter , stacks of bright yellow pipe suddenly blossomed in city parks -- pipe dropped there until it could be laid underground to apartment houses and offices being switched from oil heating to heating with indigenous coal gas or North Sea natural gas.

Sales of double windows boomed. More than a few of the stuccoed dwellings thrown up during the reconstruction of the 1950s suddenly grew new coats of heat-conserving, colored clapboard.

But other private consumption dropped a shade.

Joblessness was down from an average 4.3 percent in 1978 to an average 3.8 percent in 1979 -- the lowest in Europe -- and the gross national product grew by 4.4 percent last year, more than officially predicted at the beginning of 1979.

But the cost of living continued to rise, at an annual rate of more than 5 percent.

"This would be a dream figure for many of our neighbors, but for us, it is a terrifying figure," the Hamburg weekly Die Zeit said.

Both the government led by Chancellor Helmut Schmidt, a Social Democrat, and the opposition Christian Democrats led by Bavarian Minister President Franz-Josef Strauss worry first of all at the prospect that high rates of inflation in other countries, notably in the United States, could wash over West Germany.

President Carter's failure to get a handle on American inflation is the root of much of the friction between Bonn and Washington.

Still, the West German economy remains strong and resilient. It has withstood other storms and probably can weather this one, too.

East Germany is much more vulnerable.

The communist regime there claims, without publishing details, that East Germany increased its gross national product by 4 percent last year, only just under the target of 4.3 percent. But new investment was only half of that targeted. Probably because of the disastrous storms of the 1978-79 winter, '79 grain yields were down.

East Germans complained that the usual winter brownout was stricter and lasted longer this time.

The West Germans have forgotten what a brownout is.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK