Bert Rürup, one of the government’s so-called “wise men,” told the daily newspaper Bild the country was heading for a slowdown in growth for the rest of this year and into 2009.
“The German economy isn’t headed towards recession. The economy will weaken noticeably, but won’t collapse,” he said, adding he still expected gross domestic product (GDP) to expand by two percent this year. “Next year, however, it could be half that.”
The German economy shrank for the first time in nearly four years during the second quarter of the year, according to data released on Thursday. German GDP fell by 0.5 percent compared to the first quarter of 2008, the Federal Statistical Office said in a statement. It also revised 2008 first quarter GDP growth down from 1.5 percent to 1.3 percent.
The head of the Federal Labour Agency, Frank-Jürgen Weise was also determinedly upbeat, saying there was no reason to fear the slowdown would affect the job market. In an interview with business daily Financial Times Deutschland, Weise said German unemployment was likely to continue to improve until the end of the next year.
“We’re keeping a close eye on the figures, but they’re not decisive for the labour market at the moment,” he told FTD. “We still expect the numbers to be slightly better in 2009 than in this year.”