German economy now in recession
November 13, 2008
German economy now in recession
Germany has entered a recession after government figures showed that the country’s economy contracted by 0.5% in the third quarter.
This is the second consecutive quarter that the economy has shrunk after a 0.4% contraction in the second quarter.
The fall in economic output was greater than the 0.2% fall that many analysts had expected.
Last week, official figures showed that German industrial output fell 3.6% in September compared with August.
“A negative effect on gross domestic product came from foreign trade, with a strong increase in imports and weakening exports,” the Federal Statistics Office said.
The last time that the German economy was in recession was the first half of 2003.
“This confirms the German economy is in a marked slump,” said Klaus Schruefer at SEB. “We will definitely get a further contraction in the fourth quarter, probably of a similar order,” he added.
Worse to come
Such a pessimistic outlook was echoed by Sebastian Wanke at Dekabank: “There won’t be an improvement in the fourth quarter. The situation will only get worse.”
Such gloomy predictions are based on the glut of recent indicators showing a slowdown in the German economy.
Orders for goods produced by the world’s largest exporter fell 8% between August and September, according to the economy ministry in Berlin. Orders from outside Europe fell 11.4%, while domestic orders dropped 4.3%.
“Anecdotal evidence and leading indicators are scary,” said Carsten Brzeski at ING Financial Markets.
Source: bbc.co.uk/
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