Germany, Europe's largest economy, has fallen into a "technical recession," according to official data released Thursday, dealing another blow to the sagging global economy.
According to statistics released by German Federal Statistics Office in Wiesbaden, Germany's GDP decreased by 0.5 percent in the third quarter following a 0.4 percent retreat in the second quarter, pushing the country into its first technical recession in five years.
The latest fall was much deeper than the 0.2 percent drop expected by economists as declining global demand amid the financial crisis was significantly weakening exports, the main driving force behind Germany's growth. Economists said that the latest data has dimmed hopes that Germany, which enjoyed boom years in 2006 and 2007, might be able to weather the global downturn.
"It is finally clear: Germany is in a recession. This could last until the middle of next year," said Commerzbank economist Ralph Solveen.
An economic slowdown has become increasingly obvious in Germany in recent months as industrial production registered its biggest drop in nearly 14 years in September while manufacturing orders dropped eight percent between August and September.
German industrial giants are already preparing for a harsh economic winter. Carmaker Daimler has said that it would shut two German plants for a month due to a sharp drop in demand. Opel, which is part of General Motors, also closed two of its German plants for three and two weeks respectively to reduce production, forcing workers to take a vacation.
Germany's engineering giant Siemens said Thursday that its 2009 goal of more thanr eight billion euros in profit has become "more ambitious" as order growth and sales slow. The company has announced a savings program that includes 16,750 job cuts by 2010.
Thanks to a relatively good start this year, the German government is still predicting a 1.7 percent GDP growth for the whole year, but forecasts a much slimmer expansion of just 0.2 percent next year. The government's independent council economic advisers however predicted zero growth for 2009 and called on the German government to expand a 50billion-euro (62.5 billion U.S. dollars) economic stimulus package to help spur growth.
"Times are getting harder for Germany," German Finance Minister Peer Steinbrueck admitted on Thursday. But he also fended off criticism of the government's stimulus package by saying that he did not think the government should add extra money to its 50 billion-euro bailout package, as it would burden Germany's future generations.
(Xinhua News Agency November 14, 2008)
