West German Slump , May Shake All Europe

Northern Advocate, 1 August 1949, Page 5

West German Slump , May Shake All Europe

BERLIN, Sun. (11.30 a.m.). —German export trade is headed for a “terrible time,” according to many Western authorities here who forecast an economic squall in Western Germany. One Economic Cooperation Administration official said: “We have expected a slow-down or decline in production for some time. “Whether it will go beyond a levelling off, no one knows.” Western officials are concerned because they say Western Europe’s recovery pivots on Western Germany’s regaining of economic vitality.

A major slump in Western Germany could “shake the entire structure of the European recovery programme.” There are many symptoms of coming German economic trouble. Production has levelled off after a phenomenal rise. German goods are meeting sales resistance abroad as Britain grapples with a dollar deficit and the United States faces a business decline. Germany’s unemployment hit a postwar peak this month. Business failures are increasing and there is a critical shortage of investment capital. However, the whole picture is not dark. Inflation lias eased, and prices have dropped although they are still staggeringly high. High-income Americans in Germany

cannot afford to buy many German products even at the favourable, black market currency exchange rate. EGA and Military Government officials emphasise that Germany’s main hurdle is where to sell what it produces in face of contracting ' world markets and stiffer competition. Before the war many German industrial products went to what is now Russian-occupied East Germany, and to Eastern Europe in exchange for food and raw materials. ■ Since the war trade between the Western and Eastern zones has been on a small scale. Talks on a revival of East-West trade are still tangled with the rival currencies question. Trade with Communisl-dominatod Eastern Europe is improving, however.