Bad News
January 21, 2009
The German government has forecast that the country's economy will shrink by 2.25 percent this year. That would be the worst performance for Europe's biggest economy since the end of World War II.
Germany's Economics Minister Michael Glos and Finance Minister Peer Steinbrueck released the latest data on Wednesday, revising their prior 2009 forecast down sharply from last October's prediction of 0.2 percent growth.
Since then, German exports have declined precipitously and are expected to be down 8.9 percent for the year. The previous worst postwar annual economic performance was in 1975, when West Germany's gross domestic product in declined by 0.9 percent.
Joblessness to increase
At same time, the Berlin government's annual economics report predicts rising unemployment as a result of the global economic slowdown. The number of people out of work is expected to climb by 500,000 to 3.5 million before the end of the year. That would push the German unemployment rate back up to 8.4 percent, according to the ministers' report.
German consumers remain skeptical
Adding to the bad financial news, a Forsa Institute survey published on Wednesday revealed that a majority of Germans remain skeptical of Chancellor Angela Merkel's second 50-billion-euro ($66 billion) stimulus package. They feel that it will fail to help shield Europe's biggest economy from the negative effects of the global recession
Conducted for the weekly Stern magazine, the poll found that 69 percent of Germans fear that the program agreed upon last week by the coalition government will not help the country escape the effects of the rapidly expanding worldwide economic meltdown.
Only 26 percent of those responding felt confident that the stimulus package, which includes public spending on infrastructure projects, as well as a number of tax benefits, would help to shore up Germany's troubled economy.
In fact, 59 percent dismissed the government's plan to offer 2,500 euros ($3,200) as an incentive to car buyers who trade in older vehicles for more environmentally friendly automobiles. Only 11 percent said they would even consider accepting the offer.
On Monday, the European Commission had already announced its experts' opinion that the German economy would contract by 2.3 percent in 2009.