The German economy, Europe’s biggest, posted a sharp contraction late last year as crucial exports collapsed while several economists have now revised their forecasts for this year even lower.
German output declined by 2.1 percent in the last quarter of last year, its sharpest contraction since the country was reunited in 1990, official data confirmed yesterday.
The fourth-quarter drop from the previous three-month period was the third straight quarter of economic decline and suggested that Germany was in the midst of its worst recession since World War II.
For all of last year, economic activity expanded by 1.0 percent when data was adjusted for the number of working days, a statement by the Destatis statistics service said.
This year, the economy could shrink by 3.5 percent or more German bank analysts said, while the official forecast currently sees a contraction of between 2.0 percent and 2.5 percent, which would already be the country’s worst slump in six decades.
Confirming figures first released on Feb. 13, Destatis said that “the German economy declined markedly in the fourth quarter of 2008.”
Going back before German reunification, UniCredit analysts Alexander Koch said the drop was the strongest quarterly decline since early 1987, when a hard winter shut down construction activity.
Destatis said the main reason for Germany’s current slump was a fall in exports, which plummeted by 7.3 percent in the fourth quarter while imports declined by a more modest 3.6 percent.
Germany, which accounts for about a third of all eurozone output, was still the world’s leading exporter last year, just ahead of China, and has been slammed by the global economic slowdown.
“The unprecedented slump in export orders in the course of last year triggered the strongest drop in real exports since reunification,” Koch said.
German companies also cut investment in machinery and equipment as orders dried up, though inventory building contributed slightly to business activity.
On an annual comparison, fourth-quarter GDP shed 1.7 percent from the same period in 2007, Destatis said.
For this year, Koch said the “current ugly data” led UniCredit to revise its German forecast lower to an economic contraction of between 2.5 percent and 3.5 percent.
Deutsche Bank’s chief economist Norbert Walter warned on Monday that the economy could shrink by 5 percent, and assumed there would be “a real upswing” in the middle of the year.
“It cannot be ruled out that this upswing will not come,” Walter told the mass circulation daily Bild. “Therefore a worse result than this [5 percent contraction] can no longer be excluded.”
Meanwhile, a total of 40.8 million people were employed in Germany last year, an increase of about 1.0 percent from 2007 and the highest level since reunification, Destatis said.
But the rate of increase fell significantly as the year progressed and unemployment stood at 6.6 percent at the end of last year, it added, which curbed consumer spending.
“The final consumption expenditure of households dropped by 0.6 percent as compared with the previous year,” the statement said.
Germany’s jobless rate is expected to climb to 8.4 percent this year, officials said last month, while a poll of top economists published on Monday by the Financial Times Deutscheland predicted that 800,000 more people could be out of work by the end of next year.
Household’s disposable income rose by 1.3 percent owing to the increase in employment and pay raise agreements last year, but traditionally thrifty Germans put more in the bank than they spent, pushing their savings ratio up to 10.3 percent.
People with missing teeth might be able to grow new ones, said Japanese dentists, who are testing a pioneering drug they hope will offer an alternative to dentures and implants. Unlike reptiles and fish, which usually replace their fangs on a regular basis, it is widely accepted that humans and most other mammals only grow two sets of teeth. However, hidden underneath our gums are the dormant buds of a third generation, said Katsu Takahashi, head of oral surgery at the Medical Research Institute Kitano Hospital in Osaka, Japan. His team launched clinical trials at Kyoto University Hospital in October, administering an experimental
IVY LEAGUE GRADUATE: Suspect Luigi Nicholas Mangione, whose grandfather was a self-made real-estate developer and philanthropist, had a life of privilege The man charged with murder in the killing of the CEO of UnitedHealthcare made it clear he was not going to make things easy on authorities, shouting unintelligibly and writhing in the grip of sheriff’s deputies as he was led into court and then objecting to being brought to New York to face trial. The displays of resistance on Tuesday were not expected to significantly delay legal proceedings for Luigi Nicholas Mangione, who was charged in last week’s Manhattan killing of Brian Thompson, the leader of the US’ largest medical insurance company. Little new information has come out about motivation,
‘MONSTROUS CRIME’: The killings were overseen by a powerful gang leader who was convinced his son’s illness was caused by voodoo practitioners, a civil organization said Nearly 200 people in Haiti were killed in brutal weekend violence reportedly orchestrated against voodoo practitioners, with the government on Monday condemning a massacre of “unbearable cruelty.” The killings in the capital, Port-au-Prince, were overseen by a powerful gang leader convinced that his son’s illness was caused by followers of the religion, the civil organization the Committee for Peace and Development (CPD) said. It was the latest act of extreme violence by powerful gangs that control most of the capital in the impoverished Caribbean country mired for decades in political instability, natural disasters and other woes. “He decided to cruelly punish all
NOTORIOUS JAIL: Even from a distance, prisoners maimed by torture, weakened by illness and emaciated by hunger, could be distinguished Armed men broke the bolts on the cell and the prisoners crept out: haggard, bewildered and scarcely believing that their years of torment in Syria’s most brutal jail were over. “What has happened?” asked one prisoner after another. “You are free, come out. It is over,” cried the voice of a man filming them on his telephone. “Bashar has gone. We have crushed him.” The dramatic liberation of Saydnaya prison came hours after rebels took the nearby capital, Damascus, having sent former Syrian president Bashar al-Assad fleeing after more than 13 years of civil war. In the video, dozens of
RSS