As a result, potential output has remained flat. Potential growth is considerably below that of the euro area and particularly the USA. The problems ensuing from the reunification of Germany have undoubtedly also loomed large in the weak growth of the German economy.
At the start of the 1990s, for instance, state subsidies ignited a construction boom which petered out in the middle of the decade, not least because public authorities had to curb their investment and overcapacity already existed in the private sector. The subsequent adjustment process is still continuing.