European Economy. Economic Papers. Germany's growth performance in the 1990's

Government Consumption (annual averages)
1971-2000
0.4
0.6
0.4
0.3
0.5
0.5
0.3
0.5
1991-2000
0.3
0.5
0.1
0.3
0.3
0.3
0.1
0.5
1991-1995
0.4
0.5
0.0
0.2
0.3
0.3
0.0
0.5
1996-2000
0.2
0.4
0.2
0.3
0.3
0.3
0.3
0.5
Investment (annual averages)
1971-2000
0.3
0.5
0.4
0.4
0.4
0.4
0.7
0.9
1991-2000
0.4
0.2
0.3
0.5
0.3
0.4
1.2
0.0
1991-1995
0.4
-0.2
-0.2
-0.1
-0.2
-0.2
0.7
-0.3
1996-2000
0.4
0.7
0.8
1.1
0.8
0.9
1.6
0.3
of which: Equipment (annual averages)
1971-2000
0.2
0.3
0.3
0.3
n.a.
n.a.
0.5
0.5
1991-2000
0.1
0.2
0.3
0.5
n.a.
n.a.
1.0
0.3
1991-1995
-0.2
0.0
0.0
0.1
n.a.
n.a.
0.6
0.0
1996-2000
0.5
0.5
0.6
0.9
n.a.
n.a.
1.3
0.5
of which: Construction (annual averages)
1971-2000
0.1
0.1
0.0
0.1
n.a.
n.a.
0.2
0.4
1991-2000
0.2
-0.1
0.0
0.0
n.a.
n.a.
0.2
-0.2
1991-1995
0.5
-0.2
-0.2
-0.2
n.a.
n.a.
0.1
-0.3
1996-2000
-0.2
0.1
0.2
0.2
n.a.
n.a.
0.4
-0.2
(1)
Data up to 1991 West Germany.
(2)
Euro-area excluding Germany, Greece, Ireland, Portugal and Spain
(3)
EU excluding Germany, Greece, Ireland, Portugal and Spain
Source : Commission services
As for investment, it can be seen that the average growth contribution of this demand
category over the longer term is not significantly different for the larger European countries.
What distinguishes Germany from the other countries, however, is that the sharp revival of
investment spending in the second half of the 1990s did not take place. Differentiation
between the two investment categories equipment and construction reveals that it is
predominantly construction investment which is at the root of comparatively sluggish growth
of capital formation. Indeed, compared to its longer-term average the average growth
contribution from equipment investment in Germany increased in the second half of the 1990s
by roughly the same amount as in the other large continental European countries, although the
increase fell considerably short of that in the US and the UK. By contrast, the growth
contribution from construction investment, which for the other large European countries
increased slightly in the second half of the 1990s in comparison with its longer term average,
saw a distinct drop in Germany. As a consequence, construction investment accounts for a
good one third of the growth difference between Germany and its EMU/EU partner countries
during the second half of the 1990s. Developments in the construction sector are dealt with in
more detail in Box 2.