Economic Recovery: A New Germany Rises

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At home, one of Germany's biggest dilemmas is how to cope with the economic consequences of an aging population. "You're going to face a problem in the social-security system, because you have fewer people paying in and more people taking money out," says Reiner Klingholz, director of the Berlin Institute for World Population and Global Development. Klingholz says the solution is to increase immigration. A new immigration law will allow some 200,000 immigrants--highly skilled economic migrants and asylum seekers--into the country each year.

But Germany's greatest challenge remains what Horst Kohler, the new President, describes as "the uncertainty" felt throughout society. "We need a new spirit of initiative," Kohler said in May. That spirit may be taking hold. One indication is all the do-it-yourself stores and how-to classes springing up across the country as people adapt to hard times. According to marketing company SevenOne Media, Germans spend $43.7 billion a year on home improvements, double the amount spent in Britain and France. The biggest beneficiary of this trend is OBI, the Home Depot of Europe, whose CEO, Sergio Giroldi, says the company sold $7.6 billion worth of tools, wood and home decorations last year. He expects 10% growth this year. That's a good sign, since Germans still have a lot of work to do if they want to turn their country around. --With reporting by Regine Wosnitza/Berlin