GERMANY: Germany predicts sharp 6.0 percent economic contraction this year.

Record ID: 739190

  • Title: GERMANY: Germany predicts sharp 6.0 percent economic contraction this year.
  • Date: 1st May 2009
  • Summary: COLOGNE, GERMANY (APRIL 29, 2009) (REUTERS) WIDE OF JOB CENTRE PAN DOWN FRONT OF JOB CENTRE PEOPLE WALKING PAST JOB CENTRE PEOPLE STANDING AT COUNTERS AND WALKING PAST INSIDE JOB CENTRE PEOPLE WALKING INSIDE JOB CENTRE PAN FROM PERSON SITTING AT COMPUTER TO OTHER PEOPLE AT COMPUTERS
  • Embargoed: 16th May 2009 13:00
  • Keywords:
  • Location: Germany
  • Country: Germany
  • Topics: Economic News
  • Reuters ID: LVAMATL88XBJPRB5F7M8BK95IUJ
  • Story Text: The German government slashed its forecast for the economy on Wednesday (April 29), saying a collapse in exports would lead to a record 6.0 percent contraction in gross domestic product (GDP) this year and only meagre growth in 2010.
    The new forecast represents a dramatic downward revision from a projection three months ago that GDP would shrink by 2.25 percent in 2009.
    Since then, Germany has seen foreign demand for its products dry up as consumers around the globe rein in spending in the face of the worst economic crisis in 80 years.

    "We believe a slight improvement in 2010 of plus 0.5 percent will be possible and achievable," Economy Minister Karl-Theodor zu Guttenberg told reporters.
    Berlin now expects exports, which have been the prime driver of growth in Europe's largest economy in recent years, to plunge 18.8 percent in 2009.
    The government said that drop was responsible for three-quarters of the
    0 percent contraction it expects this year, a result which would easily be Germany's strongest GDP drop since World War Two.
    Passersby near Berlin's landmark Brandenburg Gate had different responses who the slump might affect their lives and who was to blame.
    One woman, who gave her name as Nicole, said she was not yet worried.

    "But you can see around you in your circle of friends that people are affected, for example by a short working week. I am curious to see what arrives," Nicole said.
    Ruediger Schmidt, a retired telecommunications worker, said "Who is to blame? I think there are many forces who took a big slice of the cake without having thought at all about what kind of consequences it could have."
    24-year-old political science student Robert, who works part-time cycling tourists around the German capital in a "bicycle taxi," said "we could even be affected by this if people think they can't afford a weekend in Berlin anymore."

    "So if there is a drop in tourists, that could have an effect," Robert said as he was waiting for passengers, studying for his next exam.
    The new estimate brings the government in line with other independent forecasters. Last week a group of leading economic institutes also forecast a 2009 contraction of 6.0 percent for Germany.
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