Question

why and how did germany’s economy decline during world war 2?

Answer 1

German economy like any other economy in the world suffered from Great depression of 1929, but Adof Hitler being the chancellor imposed some policies to improve the condition of the economy. The major policy of them was to increase military base in Germany so that no country can match the power of them in the world. They started doing it at the expense of people health and life and expenditure to military sector was going through cutting all other finances and loan from all over the world. Nazi Germany increased its military spending faster than any other state in peacetime, with the share of military spending rising from 1 percent to 10 percent of national income in the first two years of the regime alone.Eventually, by 1944, it reached as high as 75 percent.

The state ownership increased in many sectors in all over the world during 1929 but privatization increased at that period in Germany and led many private banks, railways to be private, but that was done in full control of state and political influence. Building the connection between public and private sector financial because government was under huge deficit, they needed much amount of money to cover their expenses and reduce the current amount deficit. During 1930 world prices for manufactured goods were falling which was the major source for Germany income, that forces Germany revenue to fall.

Before the war Nazi, limited the intake of a person to 2000 calories a day, shortages of food further created hunger in the economy and black market of food items. They reduced the calories intake so that they can reduce food supply and focus more on armaments. People were left with multiple times their cash level and deposit in the economy because there were nothing to be spend on, food was limited and this increased money in the economy helped raising black market of food.

War started when British restricted German access to world markets. The world war 2 changed the historical growth pattern of Germany. Before war it was going very smooth. After war food production fell by 51% of its level of 1938, industrial output declined by a huge percentage share. Agricultural output declined mainly due to wartime destruction and partly due to the British blockade that prevented the import of fertilizer and other raw materials from outside of Europe. The population share of 18-64(working population)were killed in war which hit the economy very badly and decreased the productivity level in the economy and posed a big pressure on the whole economy. In 1942 military of the economy was growing due to focus on losing war. There were nothing to spend on people. By 1944, almost everything in the economy was spended on military. Almost every factories and firms were destroyed, resulted in destruction of collapse of German economy in 1945.