Germany has done it the hard way. While the US has boomed on the back of consumer spending, Germany has done it the old-fashioned way. It has grown through producing things.
It has not been easy, and earlier this decade it hit recession, twice.
But, at last, the cost of reunification is as good as paid. This year, Germany is expected to have a budget surplus, government debt as a percentage of GDP has fallen right down and its balance of payments continues to enjoy a very healthy surplus.
What is more, while all around stock markets have been in crisis, the German DAX has done alright. Sure, it is down on the year high, but only by about 6 per cent, much less than in the US, UK or Japan. Furthermore, the index is now up about 15 per cent on the start of the year, so all in all, not a bad performance.
And now the latest figures on its GDP are out. In the third quarter of this year, Germany grew by 0.7 per cent, taking its overall growth to 2.4 per cent.
And at last, domestic demand is rising. In the second quarter, domestic demand slumped by 0.9 per cent, but the good news, in the quarter just gone, it grew by 0.9 per cent, making up for the previous loss.
But it does seem that next year the baton needs to be passed to the German consumer. Recent evidence suggests that German manufacturing is slowing, and with the euro so strong against the dollar, a slowdown in export growth is likely.
But Jennifer McKeown, European economist at Capital Economics, said, “On balance, though, with the labour market still in very good health, we expect only a moderate slowdown in overall GDP, from 2.7 per cent this year to around 2.2 per cent in 2008.
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