• Germany's news in English

Waning demand for exports fuels recession fears

AFP · 7 Nov 2008, 17:33

Published: 07 Nov 2008 17:33 GMT+01:00

Facebook Twitter Google+ reddit

In another sign that Europe's biggest economy is probably in recession, industrial output fell by 3.6 percent in September from August, the economy ministry said. Economists polled by Dow Jones Newswires had forecast a fall of 2.0 percent.

On a less volatile two-month basis, output rose 0.5 percent in August and September from June and July, but it fell by 1.3 percent in the third quarter compared to the April-June period, the ministry said in a statement.

"The tendency of the last few months ... is that production is clearly pointing downwards," it said. "As a result of continued weak demand ... perspectives for production are gloomy."

The German economy shrank in the second quarter and figures next Thursday had been expected for some time to confirm that output also fell in the July to September period, meaning Germany is officially in recession. Berlin has slashed its 2009 growth forecast to just 0.2 percent, the slowest rate of growth since Germany last suffered a recession in 2003. Last Monday, Germany's widely-watched Ifo sentiment indicator showed business confidence dropping in October to its lowest point in more than five years.

But Friday's data, coupled with an eight-percent slump in orders announced on Thursday – the biggest fall since German reunification in 1990 – raises fears that the downturn may be deeper and longer than expected. The "huge drop is a worrying sign of a severe downturn to come," Jennifer McKeown from Capital Economics said in a research note.

"With the service sector surveys pointing to stagnant output, next week's GDP figures will almost certainly reveal another marked contraction, leaving Germany in its second recession in five years," McKeown said.

This is borne out by a string of recent, highly downbeat assessments of conditions in the real economy from German companies – not just car giants like BMW and Daimler, but also in other sectors. Sportswear firm Adidas on Thursday said that uncertainty was so high it could not give a forecast for 2009, and on Friday reinsurance giant Munich Re dropped its 2008 profit target following a plunge in profits.

"A noticeable recovery before the second half of next year looks extremely unlikely. Lean times are ahead for the industrial sector," Unicredit economist Alexander Koch said.

Story continues below…

Both the European Central Bank and Chancellor Angela Merkel's government have attempted to jumpstart growth, with the ECB joining other central banks in slashing interest rates and Berlin launching a stimulus programme.

But economists are sceptical that the ECB and governments have done enough to stop Germany and the entire Eurozone from entering a deep slowdown. The International Monetary Fund forecasted on Thursday that advanced economies would contract next year for the first time since World War II, with the Eurozone economy expected to decline by 1.3 percent.

Facebook Twitter Google+ reddit

Today's headlines
Outrage over ruling on 'brutal' gang rape of teen girl
The now convicted suspects, sitting in court in Hamburg. Photo: DPA.

A 14-year-old girl was gang-raped and left partially clothed and unconscious in freezing temperatures. Now prosecutors are appealing the sentences for the young men found guilty, most of whom will not set foot in jail.

Dozens of Turkish diplomats apply for asylum in Germany
Demonstrators holding a giant Turkish flag protest against the attempted coup in Istanbul in July. Photo: DPA.

Since the failed putsch attempt in Turkey in July, Germany has received 35 asylum applications from people with Turkish diplomatic passports, the Interior Ministry confirmed on Wednesday.

Hertha Berlin fan club criticised for 'anti-gay banner'
Hertha BSC beat FC Cologne 2-1. Photo: DPA

A 50 metre fan banner apparently mocking the idea of gay adoption has overshadowed Hertha BSC's win in the Bundesliga.

Germany stalls Chinese takeover of tech firm Aixtron
Aixtron headquarters in Herzogenrath. Photo: DPA

The German government on Monday said it had withdrawn approval for a Chinese firm to acquire Aixtron, a supplier to the semiconductor industry, amid growing unease over Chinese investment in German companies.

Politicians call for tough sentences for 'killer clowns'
File photo: DPA.

Now that the so-called 'killer clown' craze has spread from the US to Germany, elected officials are drawing a hard line against such "pranks", with some threatening offenders with jail time of up to a year.

Nearly one in ten Germans are severely disabled
Photo: DPA

New figures reveal that 9.3 percent of the German population last year were considered severely disabled.

The Local List
Germany's top 10 most surreal sites to visit
The Upside-Down House, in Mecklenburg–Western Pomerania. Photo: Olaf Meister / Wikimedia Commons

From upside-down houses on Baltic islands to a fairy-tale castle near the Austrian border, Germany is a treasure trove of the extraordinary.

Bavarian critics back Merkel for Chancellor again
Photo: DPA

The Christian Social Union (CSU) have long delayed backing Angela Merkel as their candidate for Chancellor in next year's general election. But now key leaders are supporting her publicly.

Four taken to hospital after hotel toilet bursts into flames
File photo: DPA.

Four guests at a Nuremberg hotel were taken to hospital due to smoke inhalation early Monday morning after a toilet there burst into flames.

Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German towns, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd