into its future, the world’s third largest economy
behind the US and Japan, seeks to gain some momentum
and remain stable in 2006 forecasts.
“Companies are looking a little more forward than
backward,” the German Embassy’s Labor Counselor,
Michael Mersmann, says about German companies.
According to a report released by Deutsche Bank, projections
for the German economy in 2006 indicate steady growth
throughout the year, but also predict a growing parallel
between German and US employment woes as competition
from developing nations expands to unskilled labor sectors.
The report also highlights economic irony as production
and export totals are set to increase, yet remain historically
“There is no big job creation,” says Mersmann,
“Automobile industries will not hire, but will
not fire people either.”
Forecasted to increase in production are high-end retail
goods, such as the automobile and tech industries. Expected
production growth by each sector includes a three percent
growth in the automobile and chemical industries, alongside
a four percent growth in Germany’s tech sector,
according to the report. In contrast, German textile
production will remain sluggish and stands to lose three
percent of its productivity, mainly to foreign rivals.
Managing Director of Deutsche Bank’s research
wing, Dr. Norbert Walter, believes structural reforms
to the German economy have left their imprint and now
help the economy steadily progress, but have done little
to help improve both skilled and unskilled segments
of the economy.
“Construction will continue to do poorly,”
Walter writes in an email, “Sunset industries
in the producing sector with high labor content and
little value added will do poorly, too.’”
Even amid a more conservative German consumer, and contemporary
high oil prices, Mersmann believes the change in leadership
gives the German populace a new perspective on their
future and a feeling of economic content.
“In the last two years foreign investors have
been active in a number of sectors,” Walter writes.
The upbeat attitudes come from a large amount of foreign
investment now emanating into the country. Conglomerate
pharmaceuticals, such as Proctor & Gamble, have
seized on the research and development portion of the
German chemical industry, and have invested their money
and energy into the country.
The Deutsche Bank figures corroborate these predictions,
and state inflation is set to peak in early 2006, while
an ease in the unemployment rate agrees with the idea
that steady foreign investment helps spur job creation.
Mersmann concurs with Walter’s estimates and Deutsche
Bank’s figures. He believes that around $100 million
in American foreign investment will flow into Germany
during 2006. This translates into more foreign ownership
in which most German companies were not once open to,
but may help alleviate the economic stagnation.
“Foreign investors are flooding the German real
estate market these days,” Walter writes. In Germany,
the hope is the floods continue to swell.