Newspaper article The Christian Science Monitor

German Economists See Zero Growth, More Jobless A Christmas Shopping Flurry Belies Toughest Times since World War II

Newspaper article The Christian Science Monitor

German Economists See Zero Growth, More Jobless A Christmas Shopping Flurry Belies Toughest Times since World War II

Article excerpt

GERMANY is experiencing some of its toughest times since the end of World War II, but the scene here in the trendy Kurfurstendamm shopping district these days gives no indication that Germans are feeling the economic squeeze.

The Christmas season is in full swing and people seem to be spending freely. Sidewalks are packed and department stores are jammed.

A festive backdrop to the shopping frenzy only strengthens the impression that the German recession exists only in the minds of the nation's politicians and economists. Brass bands serenade shoppers during the day, while a traditional Christmas market near the Kaiser Wilhelm Memorial Church offers hot sausages and drinks for adults and carnival rides for kids. And at night, the district is illuminated with lights strung up in the trees.

"We aren't experiencing a problem with people not wanting to spend money during the Christmas season. We can't see a difference with sales this year compared with previous years," says Monika Jarju, a salesperson at the Strunkmann & Meister bath and linen store.

It is much the same story in other major German cities. In Cologne, for example, retailers are generally satisfied with the pace of Christmas sales, according to local news media reports.

But Ms. Jarju and others were quick to caution that the Christmas season does not provide an accurate gauge of the state of the nation's economy. In Germany, they explain, Christmas is such an important holiday, that a significant number of Germans are willing to spend more than they can really afford.

"It may be good now," Jarju says, "but during the rest of the year we noticed that business was not good."

Retailers hope 1994 will bring better times. But experts are divided on whether to expect an economic upturn next year.

Five of the nation's six top economic institutes are predicting slow growth in 1994, featuring a 1.5 percent rise in gross domestic product for all of Germany, compared to a 1.5 percent drop in GDP this year. Western Germany would see about 1 percent growth, after a 2 percent drop this year. In formerly communist eastern Germany, which is struggling to overcome four decades of totalitarian mismanagement, GDP should rise by 7 percent in 1994, following a 6 percent increase this year, according to the think-tanks' projections.

Economic growth would be achieved largely by increased government spending, meaning a slightly higher federal budget deficit. The institutes predict the federal deficit will climb from about 107 billion deutsche marks ($64 billion) this year to roughly 110 billion DM ($66 billion) in 1994. …

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