_#_Diplomatic representation:
Ambassador Jeurgen RUHFUS; Chancery at 4645 Reservoir Road NW,
Washington DC 20007; telephone (202) 298-4000; there are German
Consulates General in Atlanta, Boston, Chicago, Detroit, Houston,
Los Angeles, San Francisco, Seattle, and New York, and Consulates
in Miami and New Orleans;
US—Ambassador-designate Robert M. KIMMITT; Embassy at Deichmanns
Avenue, 5300 Bonn 2 (mailing address is APO New York 09080); telephone
[49] (228) 3391; there is a US Branch Office in Berlin and US Consulates
General in Frankfurt, Hamburg, Leipzig, Munich, and Stuttgart
_#_Flag: three equal horizontal bands of black (top), red, and yellow
_*Economy #_Overview: The newly unified German economy presents a starkly contrasting picture. Western Germany has an advanced market economy and is a leading exporter. It experienced faster-than-projected real growth largely because of demand in eastern Germany for western German goods. Western Germany has a highly urbanized and skilled population which enjoys excellent living standards, abundant leisure time, and comprehensive social welfare benefits. Western Germany is relatively poor in natural resources, coal being the most important mineral. Western Germany's world-class companies manufacture technologically advanced goods. The region's economy is mature: manufacturing and service industries account for the dominant share of economic activity, and raw materials and semimanufactured products constitute a large proportion of imports. In 1989 manufacturing accounted for 31% of GDP, with other sectors contributing lesser amounts. In recent years, gross fixed investment has accounted for about 21% of GDP. In 1990 GDP in the western region was an estimated $16,300 per capita.
In contrast, eastern Germany's obsolete command economy, once dominated by smokestack heavy industries, has been undergoing a wrenching change to a market economy. Industrial production in early 1991 is down 50% from the same period last year, due largely to the slump in domestic demand for eastern German-made goods and the ongoing economic restructuring. The FRG's legal, social welfare, and economic systems have been extended to the east, but economic restructuring—privatizing industry, establishing clear property rights, clarifying responsibility for environmental clean-up, and removing Communist-era holdovers from management—is proceeding slowly so far, deterring outside investors. The region is one of the world's largest producers of low-grade lignite coal, but has few other resources. The quality of statistics from eastern Germany remains poor; Bonn is still trying to bring statistics for the region in line with West German practices.
The most challenging economic problem of a united Germany is the reconstruction of eastern Germany's economy—specifically, finding the right mix of fiscal, regulatory, monetary, and tax policies that will spur investment in the east without derailing western Germany's healthy economy or damaging relations with Western partners. The biggest danger is that soaring unemployment in eastern Germany, which could climb to the 30 to 40% range, could touch off labor disputes or renewed mass relocation to western Germany and erode investor confidence in eastern Germany. Overall economic activity grew an estimated 4.6% in western Germany in 1990, while dropping roughly 15% in eastern Germany. Per capita GDP in the eastern region was approximately $8,700 in 1990.
_#_GDP: $1,157.2 billion, per capita $14,600; real growth rate 1.7% (1990)
_#_Inflation rate (consumer prices): West—3.0% (1989); East—0.8% (1989)
_#_Unemployment rate: West—7.1% (1990); East—1% (1989); 3% (first half, 1990)