West Germans See Prosperous Year Ahead

West Germans, helped by price stability and their highest average net income increase in 16 years, will continue to see their economic well-being improved next year, a government spokesman predicted Monday.

Friedhelm Ost, chief spokesman for the government of Chancellor Helmut Kohl, said prices declined by one-half a percentage point over the past 12 months and are expected to increase only about 1% in 1987.

“This has made us the absolute world champion in the area of price stability,” Ost said at a news conference outlining West Germany’s economic prospects for 1987.

Ost also said the decline of the dollar against the West German mark, despite its dampening effect on German exports, could be viewed as positive for the economy.

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Partly because the dollar’s decline, preliminary figures on the value of world trade in 1986 show that West Germany displaced the United States from its traditional spot as the world’s No. 1 trading country. Japan remains in third place.

Most world trade is conducted in dollars and the weaker dollar automatically boosts the value of trade in the stronger-currency countries.

Trade also is a much higher percentage of gross national product, and thus more critical, for West Germany than for the United States and even Japan. U.S. exports are a little more than 5% of GNP, Japan’s exports account for 13% of GNP and West Germany’s exports are roughly 28% of GNP.

West Germany is heading for a trade surplus of around 110 billion marks, or $55 billion, at current exchange rates this year. The United States faces a deficit of as much as $170 billion.

“There are an increasing number of efforts toward protectionism in (export) deficit lands, above all in the United States,” Ost said. “Some developing countries are still under the pressure of debt problems, but they will see some of the burden removed through price stability in industrial lands and with it lower interest rates,” he said.

He said the average West German’s net real income, after taxes, insurance payments and price adjustments, increased 4.5%, the largest increase since 1970.

Ost said the key to the country’s economic success is the continuation of current policies, which, Ost said, are based on a strategy of moderate growth over time instead of “spectacular growth in individual years.”