Germany sees 5% GDP fall in 2009

Egeler.jpgThe blog has been worrying for some time about what will happen when governments end their stimulus programmes. It does not share the optimism of financial markets, that these will provide to be the “escape velocity” for a quick return to 2003-7 Boom conditions.

Today’s data from Germany seems to support its concerns. According to Roderich Egeler, German statistics office president, “the German economy contracted for the first time in six years – and at a pace not seen before in post-war history“. The office estimates GDP declined 5% in 2009, and says the economy “stagnated” in Q4, following the end of the pre-election government support measures, such as the car scrappage scheme.

Equally, the Wall Street Journal reports that small/medium size companies (SMEs) in Europe and the USA are finding it increasingly difficult to obtain vital loans to keep their businesses alive. These are critical players in the chemicals value chain, accounting for 70% of EU private sector workforces, and 49% in the US. As a result, the Journal says that insolvencies and job losses are likely to continue to rise.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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