German productivity is rising at an annual rate of 1.7 percent, more than double the rate from 1998 to 2004. This trend is one of several that indicate the rising economic power of Germany.

Some are skeptical of the improvement. Jörg Krämer, chief economist at Commerzbank in Germany, said, “If we had radical reforms, I might be willing to interpret these rises as changes in the trend of productivity growth. But we didn’t, so I don’t.” In other words, the government didn’t do anything to better productivity.

But businesses did. The International Herald Tribune of November 30 detailed the story of the Wittenstein factory, which has radically reshaped both the configuration of its plant and the processes its workers follow in the last year; having abandoned the traditional management structure, company policy now places engineers next to assembly-line workers. Productivity consequently rose from 15 percent to 20 percent in just 18 months.

Stephen Roach, chief economist at Morgan Stanley, says, “[T]here is a tendency to overemphasize the political angle in delivering economic results in Germany” (ibid.). After a recent visit to get a first-hand look at the evidence of German growth, he expects productivity to surge even more in the near term.

Though the rest of Europe is not showing this sort of improvement in productivity, the entire region is still showing growth fueled by Germany’s economic success.

The Trumpet has long predicted that Germany will be at the center of Europe economically. For more information on recent German activity in the corporate sector, please read “Germany’s Corporate Blitzkrieg.”