Germany economy in deep trouble

Discussion in 'Economics' started by talknet, Jan 21, 2009.

  1. talknet


    Wednesday, 21 January 2009-: Germany has predicted that its economy will shrink by 2.25% in 2009, which would be its worst performance in the post-World War II era.

    The downgraded forecast is much lower than the previous prediction of 0.2% growth, made in October.

    Germany's economy accounts for about a third of eurozone output.

    "There is no precedent in post-war history for this economic decline that we unfortunately have to forecast," said economy minister Michael Glos.

    'Greatest challenges'

    Mr Glos predicted that exports - a key factor in German growth in recent years - would slump by 8.9% this year.

    He also said that the jobless rate would climb to an average of 8.4% in 2009, from 7.8% in 2008.

    "The German economy is facing this year the greatest challenges since unification [in 1990]. Germany is integrated into the global economy like hardly any other industrialised country," added Mr Glos.

    The economy slipped into recession in the third quarter of 2008.

    Germany's Federal Statistical Office has said the economy grew by 1.3% in 2008, about half the rate of 2007.
  2. talknet


  3. talknet


    Germany is a export power-house for heavy industrial machinery. German economy collapsing means worldwide giant industries are shutting down which will have a destructive "domino effect" on world economy.
  4. Production based on a structure of production that was in disequilibrium thanks to unnaturally low rates of interest and inflationary policies cannot last. In fact, contraction these days may be a sign of a healing economy as the poison administered by the central banks to try and bolster production is liquidated.