German Economy Tapered Most in 22 Years

German economy dipped for the third time in a row and most in last 22 years mostly because of the global financial crises worn out export demand and companies cut investment.

GDP dropped by 2.1 percent from the third quarter, when it fell 0.5 percent, the federal statistics office said today. This is the biggest decline since first quarter of 1987. German companies will also cut jobs as global growth slows demand for exports diminishes. According to IMF Europe, economy will shrank about 2.5 percent this year worst performance since Second World War. “The dark side is not ended yet,” said an economist at Citigroup Inc. in London. Almost the first quarter is in the downside and the overall viewpoint for the whole year remains austere. Economic stabilization is unexpected until the year-end.


The euro-region economy possibly dropped 1.3 percent in the fourth quarter from the third a economists survey explains.

European Central Bank Decided Rate Cuts

European Central Bank has shown indication to cut its standard interest rate to fight the recession successfully. German business raised all of a sudden, for the first time in the past eight months, in January just after the European Central Bank cuts the rate by 2 percent and the government doubled the economic spur package.

Fourth-quarter plunge in German GDP possibly replicate a high sensitivity to external demands for investment and cars said by an economist at Merrill Lynch in London. German sales of car will possibly sink 6.5 percent to 2.9 million vehicles this year, lowest since 1990 according to VDA Group. Detlef Wittig said on 5 Feb. that Volkswagen AG will close its biggest German plant for five days this month affecting two-third of its 92000 strong workforce in the country as the financial crises is fully reflect on us.

Job Losses

German unemployment rose almost twice as forecasted last month, raising the unemployment rate up to 7.8 percent. Plant and machine makers plans to reduce output and cut the staff as many as 25000 this year.

World’s largest printing press maker Heidelberger Druckmaschinen AG has already reduced more than 800 of 2500 planned job cuts. Company aims to save 200 million Euros annually by the year 2001 by expenses and reducing employee hours. German export oriented economy have to wait for some more time for its main trading partners to recover before production level improve.