Good Economic News
January 2, 2008
Germany's flourishing economy, the largest in Europe, got a further boost in the new year with the publishing of a survey giving the country glowing marks for its competitiveness.
In a study commissioned by German business daily Handelsblatt, 59 percent of the 1,200 leading executives in Europe polled rated Germany's competitiveness as "very good" or "good."
On a scale of one to five, they gave Germany an average rate of 2.3 points, with one being the best possible score.
In 2003, only 13 percent of top executives surveyed in a similar poll in Europe, shared such an optimistic outlook for Germany. Since then, Germany's image has risen in the eyes of Europe's executive by 1 percent each year.
On an international scale, only China is considered more competitive by European managers. Germany shared second place with Switzerland.
More foreign investors
"The German economy has continually become more competitive in the past years thanks in particular to companies, but also thanks to parties negotiating collective wage agreements and politics," said Bert Rürup, chairman of the "council of wise men" -- five highly regarded academics who advise the government on economic policy.
German companies have consistently restructured and together with the unions negotiated moderate and flexible wage agreements, Rürup told newspaper, Handelsblatt.
The daily reported that a further sign for economic revival lay in the fact that for the first time foreign investors own a majority share in Germany's top 30 publicly traded companies. Their share climbed from 20 percent in 2005 to 53 percent in 2007, the paper said, adding it reflected a vote of confidence in the ability of German companies to profit from a global upswing thanks to their booming exports.
"That shows -- in the eyes of foreign investors -- how competitive German companies have become, but also that there's mistrust towards the dollar," Rürup said.
Good news for the labor market
The good news from the survey was further bolstered by predictions that a decline in Germany's jobless total last year would continue in the new year despite recent signs of weakening economic growth.
"Employment will further rise in 2008," Germany's Federal Labor Office said on Wednesday, Jan 2, a day before official labor market figures were released for the month of December, 2007.
Less than two years after spiking to 5 million, Germany's number of jobless fell in November to 3.278 million people. It's the lowest level in 15 years, according to figures released by the Federal Labor Office earlier in December.
Germany's chambers of industry and commerce [DIKH] also said German economic growth will slow only slightly in 2008 and will still expand by more than 2 percent.
But German Economics Minister Michael Glos said Wednesday that he anticipated growth to continue at a slower pace. In an interview with the mass-market Bild newspaper, he added that he anticipated economic expansion to come in at just under 2 percent.
Germany emerged from a protracted period of stagnation in 2006 to report a growth rate of 2.9 percent with the economy expected to post an expansion rate last year of about 2.6 percent. In November, a government report had predicted a drop in Germany's economic growth, slipping from a forecasted 2.6 percent in 2007 to 1.9 percent in 2008.
In an interview with Berliner Zeitung, DIHK president Ludwig Georg Braun said he was confident that 300,000 jobs could be created in 2008 despite the slight slowdown in gross domestic product growth.
"The economy will slow only slightly in 2008 but the companies' expectations remain good," he said.
Shortage of highly skilled workers
Despite the flood of positive predictions, experts warn that Germany's labor market will not be able to maintain its current good form throughout 2008. German carmaker Audi announced on Wednesday that it intended to hire 800 additional engineers in 2008.
Braun said that the optimism was due more to strong worldwide economic growth rather than to political decisions made in Germany. He added he was concerned about a worsening in the shortage of highly skilled workers.
"That's where political and industry leaders need to work together to change that," he said. "We need better training but also we need to open the country more to highly qualified foreign workers."