German economy to shrink 0.8% in 2009 - Bundesbank

05 December 2008 17:58  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s economy will shrink 0.8% in 2009, reflecting the escalation of the financial crisis and the rapid cooling of the world economy, the country’s central bank said on Friday.

“The German economy is unlikely to pick up again until the expected global economic upturn in 2010,” the Bundesbank said in an economic update.

Europe’s largest economy could recover in 2010 when gross domestic product (GDP) growth was projected at 1.2%, it said.

The 2010 projection assumed that extensive government support packages and clearly expansionary macro policies would bring about a gradual easing in financial markets and the global economy, the bank said.

The bank's forecast contrasted with a recent 0.2% growth projection for 2009 by the German government.

Germany fell into recession in the third quarter when GDP shrank 0.5% from the second quarter.

Earlier on Friday, the country’s finance ministry reported a 6.1% sequential drop in October manufacturing orders and predicted further declines in industrial production in the coming months.

Germany’s chemicals industry said this week that it expected chemical production to show zero growth this year and to drop by 1% in 2009.

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By: Stefan Baumgarten
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