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TFD/PC/188 Part II 15^.* COH8ID3KATION CF THE SITUATION OF GERMAJIY

For this purposo the Board had before it the country chapter on Germany prepared by the Economic Committee for its annual report# In addition, it heard a statement by Mr# Fay, Secretariat, who outlined the economic trend in Germany and summarised the views cxpressed fcv the Economic Committee*

During the last 18 monthc expansion had continued even morę rapidly than before. Aftcr having Increai>ed by 8‘,j in 1952 and 12'jj in 195^* industrial production in the first ąuarter of 1955 was about 17, high er than in the first ouarter of 195^* The number of registered unemployed had fallen and in August represented slightly less than of the active population. Employment had been found for a largo number of refugees, many of whom had at first becn regarded as difficult to place.

Foreign demand for German export goods hrd been maintained and internal investment had been higlier them in previous periods. Prices had, on the whole, kept stable, exccpt in sorne sectors wherc they had risen perceptibly, but v/ithout creating any difficulties. Per capi ta consumption had inereased, in particular owing to the reduction of income tax and the inerease in activity.

The balance of payraents surpluses had fallen but were stall substantial. This decline rnlght be attrlbuted to inereased net outgoings of Capital in the second ąuarter of 195^ and, as frorn the first half of 1955 to email er surpluses on the trade balance. Imports had risen morę rapidly than exports, irnports being up by 32^ in the first eight monthr. of 1935 and exports being about 17^ higher in the same period than in the previous year.

Heservcs had inereased morę slowly in the second half of 195^ owing to outgoings of Capital, but the ratę had not slaclcened further despite the reduced sur plus on the trade balance in the first half of 1353.

As manpower reserves were al ,iost exhausted, a slower ratę of incre9.se for production was to be expected# Any further inerease would largely depend on raising productivity; nevertheless a slight inerease in employraent was still possible. lio defence er.ti-mates were yet availabie, so that it was difficult to ascess at thi stage the effect of rearrnament on the economic trend in 1956; it would probably be borne easily.

Investraent in the coalmlnes had proved inadeauate# The interest rates of the banies were high and the capital market, despite a recent firmness, was relatively weak. Total investment was largely financed by re-investing profits and to a less extent with banie loans.