The year 1979

In 1979, the economic development of Western industrialised countries, which managed to increase their gross national product by 3 percent in real terms, was characterised by a generally uniform curve: the economic upturns of the initial six months flattened out considerably - albeit with regional variations - over the course of the year. Considerable momentum was lost by the economies of the USA, Great Britain and the Netherlands, with, for example, Japan providing a contrast thanks to its booming industrial goods exports, rendering it largely immune to the global downwards trend.

In some aspects, the economy of the Federal Republic developed rather more favourably than those of comparable industrialised countries. Gross national product increased by 4.4 percent in real terms, and exports by 7 percent. With a rate of capacity utilisation of 84.4 percent, industry generated a growth rate of 5.6 percent and increased its overall investment in comparison with the previous year by 14 percent. At the same time, averaged out over the year, the unemployment figure fell to 876,000 (-11.8 percent). Although the results for the chemicals industry were affected negatively in the industrialised countries of the West by the rises in the price of oil and raw materials and by instances of overcapacity in various segments, the chemical companies in the Federal Republic still managed to increase their sales from DM 110.61 billion (1978) to DM 126.27 billion. Overall, the sector invested around DM 6 billion, distributed in equal thirds to the expansion of capacity, necessary replacements and the rationalisation of production processes. Mechanical engineering was also notable for its stable growth, achieving an increase in sales of over 5 percent.

Annual report 1979 (only available in German)
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The year 1978

The flourishing US economy and the upturn in the Japanese economy meant that the global economy was again growing at a faster rate, with the industrialised countries of the West recording an increase of around 3.5 percent in gross national product in real terms. However, the economic recovery was particularly based on national economic programmes and not on any self-supporting upswing. Furthermore, the EC states were clearly overshadowed by the USA and Japan. While the USA achieved a 7.7 percent rate of industrial growth, the countries of the EC managed no more than an average of 2.3 percent. Generally, the specific problems facing European industry were the increased prices of oil and raw materials, severe fluctuations in exchange rates, out-of-date production plants and the increasing competition from countries in the Far East with their cheaper production.

Generally speaking, the economy was developing more positively in the Federal Republic than in many other EC states. Real gross national product (+3.1 percent) and industrial sales growth (+3.8 percent) exceeded the values for most of the member states, and, for the first time since 1974, the number of unemployed fell below the 1 million mark to stand at around 992,950. However, neither the chemicals industry nor mechanical engineering made any great progress. Rising material costs, overcapacities (especially in the chemical fibres, plastics and fertiliser segments) and an unfavourable trend in prices prevented any great progress in the chemicals sector, which - whilst it did increase its production volume by 4.5 percent - still only managed to increase sales by around 2 percent. In terms of investment (the entire amount invested accounted for DM 5.5 billion), companies concentrated on rationalisation measures and less on extending their production. Mechanical engineering had to be satisfied with a rate of growth of only 1 percent and falling net return from sales of around 2 percent. Textiles machinery and instruments engineering stagnated, while there was expansion in the construction machinery and IT branches.

Annual report 1978 (only available in English)
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The year 1977

In 1977, the situation in the world economy was still largely determined by the consequences of the severe recession of 1974/75. Analysts were still identifying weak investment, overcapacities after many years of euphoric growth and widespread uncertainty in dealing with the central questions of economic policy. Among the OECD states, gross national product rose by around 3.5 percent in real terms, with Japan (+6 percent) and the USA (+4.8 percent) out in the lead, with the figure for the EC area around 2.3 percent.

Even if one could hardly speak of an economic crisis in the Federal Republic, the German Federal Bank nevertheless described the general economic situation as "unsatisfactory" in its business report for 1977. Gross national product did not match the high rate of dynamic growth in the previous year, increasing by only 2.2 percent. In increasing by 2.5 percent, real overall industrial sales also made only modest progress. Furthermore, the processing industry had to come to grips with an inadequate degree of utilisation of its production plants (around 80 percent), with, in many cases, inadequate investment having been made in this area. Unemployment came to represent an ever more important factor in economic life: it had hardly fallen at all (1976: 1,060,300, 1977: 1,030,000) and, since the mid-1970s, had become more and more of a persistent social problem.

The chemicals industry was no longer achieving the outstanding results of the previous year, and, with production growth at a modest 0.5 percent, was far from reaching even the growth figure for industry as a whole. The individual segments of the chemicals sector displayed very variable development: in the production of organic raw materials, no growth was recorded, although the production of synthetic rubber, pharmaceuticals and fertilisers represented lucrative business. Conversely, profits in the production of chemical fibres were restricted by global overcapacities. Mechanical engineering also suffered a rather weak year. There was practically no change in net production (-0.1 percent), with exports coming under increased competitive pressure due to the increase in the value of the DM and higher ancillary wage costs, in international comparison, while the number of corporate collapses rose (193).

Annual report 1977 (only available in German)
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The year 1976

Numerous economic institutes regarded the global economy in 1976 as existing in a state of misleading calm. On the one hand, most of the economies which had been rocked by the crisis managed to overcome the resulting weak growth (globally, gross national product rose by 5.8 percent in real terms). On the other hand, however, it was not only the German Economic Research Institute in West Berlin that saw, in the level of unemployment (which had hardly fallen around the world) and the still rather low rate of capacity utilisation in production, good reason to speak of a "still unstable situation" in the industrialised countries of the West.

In the Federal Republic, this serious economic crisis was followed by a recovery phase which lasted around five years. In increasing by 5.6 percent in real terms, gross national product heralded the end of the recession, as did the sharp rise in exports of goods and services (+14 percent), re-intensified capital investments (+7 percent) and the increase in real overall sales for industry (+7.6 percent). In the industrial sector, the economy picked up as a result of the increase in investment, reduced warehouse stocks and the high level of demand from abroad, with the investment goods industry primarily benefiting from this, with sales up 12.6 percent. As one of the most successful sectors, the chemicals industry returned growth in sales of 16.1 percent. In an interview with the Handelsblatt business magazine in May 1977, BASF Chairman Matthias Seefelder attributed the success of the major chemical groups to the "inflationary expansion of business caused by changes in the price of oil", "chemical and technical ideas" and the "processes of corporate rounding-off in the 1960s". At the same time, Seefelder stressed that, since the mid-1970s, there had been "many advantages gained from innovation that had now been exhausted" and that, "more and more often, new products [were] no more than specialities or variations on a theme". Mechanical engineering had grounds to be more than satisfied, having generated overall sales up 11.9 percent. Here, machine tools and drive technology remained the most important segments for export business.

Annual report 1976 (only available in German)
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The year 1975

The winter of 1974/1975 saw the global economy bottoming out and remaining at this level until well into 1975. In real terms the gross national product of the OECD states fell by 2 percent, with industrial production stagnating across the world or remaining well below the values for the previous year. Of the OECD countries, the sharpest fall in gross national product occurred in Switzerland, Italy, Ireland and the Federal Republic. Only Norway, Japan and Sweden managed to achieve any real growth.

Contrary to the optimistic forecasts from numerous economic institutes, which had placed their trust in the power of the economic policy measures and a forthcoming increase in demand, "in the year of off-the-mark forecasts" the recession hit the Federal Republic with full force, according to the German Economic Research Institute in its weekly reports. Gross national product fell by 3.4 percent in real terms, industrial production fell overall by around 7 percent in the wake of massive collapses, especially in the first half of the year, and, at 4.8 percent, the unemployment rate soared to record highs that were scarcely believable. Overall sales for the industrial sector which provided employment for 6.5 percent fewer people than in the previous year, fell back nominally, too (-3 percent), for the first time since the somewhat milder recession of 1967. Production goods and raw materials industries were particularly affected by the grave crisis (-13 percent), while consumer goods, foodstuffs and luxury goods emerged comparatively unscathed. In the chemicals industry, sales fell back significantly, down 13.3 percent, and, in mechanical engineering, net production fell by 7.7 percent.

Annual report 1975 (only available in German)
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The year 1974

For the global economy in 1974 the "German Economic Research Institute" correctly identified "more serious unsolved problems than in the past". Unemployment, high rates of inflation, famine, energy shortages and a global economic downturn overlapped and set limits to global growth. The USA experienced its worst crisis since the 1930s, and Western Europe a far-reaching recession. Within the group of OECD states, gross national product fell by 0.3 percent in real terms. In the Federal Republic, the economic situation continued to deteriorate. While the increase in orders on the books of the processing industry still gave some hope of the oil crisis being overcome quickly, there were other indicators that pointed in a different direction: gross national product was close to stagnating at +0.4 percent, unemployment figures were up 2.6 percent, the rate of inflation rose to close to 7 percent, demand in the capital goods industry continued to fall, and net industrial production collapsed in almost all sectors. The economic crisis policy management of the Federal Government, which had adopted a special economic programme and increased investment, was initially unable to rein in the slump in the long term. However, the chemicals industry proved to be less susceptible to the crisis, increasing both its sales and net production (1973: DM 65.17 billion, 1974: DM 86.93 billion). In terms of sales, the large-scale BASF Group even found itself at the top of the list of the world's largest chemical companies. Mechanical engineering also displayed stable progress in the crisis. Overall sales increased from DM 69.17 billion in the previous year to DM 76.39 billion, with workforce numbers remaining almost constant (1973: 1,086,400, 1974: 1,089,200).

Annual report 1974 (only available in German)
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The year 1973

In 1973, it was not only the economy of West Germany but the entire structure of the world economy which was shaken to its roots. With the dollar exchange rates being unpegged in Germany, France and other European countries on 19 March ("block floating"), the system of fixed exchange rates collapsed. Military conflicts also imposed a burden on the global economy. After the outbreak of the Yom Kippur War, October saw the Arab states reducing their oil supplies and at the same time increasing the price of crude-oil-dependent energy sources (petrol for automobiles, heating oil, chemical raw materials).

Although the transition to "block floating" helped to buffer the consequences of the first "oil price shock" in the Federal Republic, and unlike the United States for example, West Germany was not directly affected by the supply boycott, but the years of a buoyant economy, full employment and cheap energy supplies were nearing their end, to be replaced by a period of "stagflation" (low rates of growth accompanied by increasing inflation) and rising unemployment. Crude oil "was the lifeblood of the Federal Republic as an industrialised nation" (Edgar Wolfrum), with Arab countries providing 75 percent of its requirement. In November, the Federal Government responded to the oil crisis with the Energy Security Act, the introduction of speed limits on motorways and trunk roads, an embargo on applications from foreign workers and a ban on driving on four Sundays in November and December. The far-reaching economic crisis found expression both in economic policy and in the mindset of society as a whole. From then on there was intensive public discussion "of the sense and folly of economic growth" (Knut Borchhardt).

Annual report 1973 (only available in German)
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The year 1972

Continuing inflation, disruption to the structure of the international currency system, the fear of a global energy crisis, but also the continued economic expansion of the industrialised countries of the West and global trade, which continued to flourish, all contributed to the shape of the world economy in 1972. In the OECD countries, gross national product increased by 5.6 percent in real terms (Japan: +9.2 percent, the USA: +6.4 percent). The Federal Republic also enjoyed its share of the accelerated trend in industrial production, recording a growth in production of 3.2 percent and achieving a nominal increase in its gross national product of 9.2 percent.

However, in the Federal Republic, the trend of the previous year turned ever more clearly into a structural problem in terms of economic policy. Gross national product increased in real terms by only 2.9 percent, clearly lagging behind the cost of living price index (+5.8 percent). In addition, the unemployment rate rose noticeably for the first time in three years (1971: 0.8 percent, 1972: 1.1 percent). The phenomenon of prices not falling during an economic downturn and unemployment and inflation appearing at the same time was an as-yet-unknown experience for economic experts and politicians alike. Finally, the latest challenges facing the general economy demonstrated that the hopes – nurtured since the early 1960s – that it would be possible to steer business and the economy globally by means of political instruments and keep them stable could not be realised in the long term.

The chemicals industry increased its overall sales from DM 53.57 billion (1970) to DM 56.74 billion, which left it, with an average growth rate of around 5.8 percent, trailing slightly behind the average figure for German industry as a whole. In comparison with chemicals companies and other European countries, German companies were also notable for their high levels of expenditure on research and development. Between 1962 and 1972, the proportion of overall sales this activity represented in the mineral oil industry was 0.8 to 1.2 percent and in the chemicals industry 3 to 5 percent (pharmaceuticals industry: 8 to 10 percent). With sales totalling DM 68.32 billion (+4.3 percent), mechanical engineering underlined its position as the leading sector of West Germany's industry. In terms of sales, office and IT technology (DM 5.8 billion), machine tools manufacture (5.71) and drive technology (4.21) were particularly significant.

Annual report 1972 (only available in German)
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The year 1971

A slower rate of economic growth in the industrialised countries of the West and a "global hike in costs and prices" were identified by the "Working Party of German Scientific Research Institutes" as providing the main stimuli for the development of the global economy: "On the whole, the increase in national product in the Western world was amplified in the winter half-year; however, this was only due to the rapid progress of the economic upswing in North America now underway. The global rises in costs and prices weakened only slightly. The uncertainty surrounding currency policy was alleviated somewhat, although, in the light of the lack of a solution to the dollar problem, the situation remained unstable. The economic upturn in western Europe continued through the 1971/72 winter half-year, even if not as pronouncedly as anticipated in the autumn of 1971". The broad brush strokes of the global trend were also reflected in the economy of West Germany. In real terms, gross national product rose by only 2.7 percent, while the rate of inflation of 5.4 percent was indeed above the rate of growth in the general economy. Furthermore, aspects of global currency policy had a direct effect on the Federal Republic. After the Federal Government had allowed the exchange rate of the DM to float in May 1971 and the dollar had been worth only DM 3.32 in the summer, in August the US government uncoupled the dollar from the gold standard. To avoid eroding the international currency system, a currency conference held in December hiked the value of the DM against the dollar (USD 1 = DM 3.2225).

The annual balance sheet for the chemicals industry, which achieved an increase in production of 6.7 percent, was summarised as follows by the magazine "Wirtschaft und Statistik" (Economics and Statistics) in early 1972: "Moderate increases in inorganic and organic base chemicals and their secondary products were offset by larger increases in the production of plastics, synthetic rubber, chemical fibres and consumer pharmaceuticals, body care products, light-duty detergents and dishwashing detergents. Due to the difficult conditions for exports, the production of synthetic ammonia for nitrogenous fertilisers continued to fall. There were also falls in the production of materials for plant protection and vermin control". In mechanical engineering, the production figure exceeded the corresponding figure for the previous year by 7.2 percent. However, after price adjustment, domestic orders were down 14 percent and those from abroad down 10.2 percent.

Annual report 1971 (only available in German)
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The year 1970

In the group of Western industrialised states, economic development was largely ambivalent. In the OECD countries, gross national product rose by 2.5 percent in real terms and throughout the EEC by 5.5 percent. In the industrialised countries of Europe, the highest rates of growth were achieved by Austria (+7 percent), France (+6 percent) and the Netherlands (also +6 percent), while the economies of Norway (+3.5 percent) and Great Britain (+2 percent) grew at a below-average rate. With growth in real terms of 11 percent, at a global level Japan cemented its leading position among the industrialised nations. Although, nominally speaking, the USA achieved its highest figure for gross national product in its history with DM 1010 billion, in real terms 1970s saw a minus figure of 0.4 percent being recorded.

The key economic ratios for the Federal Republic for 1970 were just below those for the previous year. Gross national product in real terms (+5.9 percent) and net employee wages (+8.7 percent) rose perceptibly once again, accompanied by a low rate of unemployment of 0.7 percent. The speed with which the 1967/68 crisis gave way to a boom can be seen from an overview of the years from 1967 to 1970: in 1970, real gross national product was up by almost 23 percent, capital investments by around 35 percent and private consumption by around 20 percent, compared with the equivalent figures from four years previously. However, as was the case in numerous other industrialised states, the pace of industrial development fell away somewhat. In West Germany, industrial production rose by 6.1 percent, a value slightly below the EEC average (6.6 percent). Falling production dictated the trend in the textiles and clothing industries; however, the electrical engineering industry, the automotive industry, the chemicals industry (+5.9 percent) and mechanical engineering all recorded strong growth.

Annual report 1970 (only available in English)
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