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| Version 7 | Version 8 |
|---|---|
| German economy now in recession | German economy now in recession |
| (about 6 hours later) | |
| Germany has entered a recession after government figures showed that Europe's largest economy contracted by 0.5% in the third quarter. | Germany has entered a recession after government figures showed that Europe's largest economy contracted by 0.5% in the third quarter. |
| This is the second consecutive quarter that the economy has shrunk after a 0.4% contraction in the second quarter. | This is the second consecutive quarter that the economy has shrunk after a 0.4% contraction in the second quarter. |
| The fall in economic output, driven by falls in exports, was greater than many analysts had expected. | The fall in economic output, driven by falls in exports, was greater than many analysts had expected. |
| Rich countries' think tank the OECD has also forecast a fall in Euro-area economic activity of 0.5% next year. | Rich countries' think tank the OECD has also forecast a fall in Euro-area economic activity of 0.5% next year. |
| "A negative effect on gross domestic product came from foreign trade, with a strong increase in imports and weakening exports," the Federal Statistics Office said. | "A negative effect on gross domestic product came from foreign trade, with a strong increase in imports and weakening exports," the Federal Statistics Office said. |
| The last time that the German economy was in recession was the first half of 2003. | The last time that the German economy was in recession was the first half of 2003. |
| Anecdotal evidence and leading indicators are scary Carsten Brzeski, ING Financial Markets OECD projects protracted downturn | Anecdotal evidence and leading indicators are scary Carsten Brzeski, ING Financial Markets OECD projects protracted downturn |
| "This confirms the German economy is in a marked slump," said Klaus Schruefer at SEB. "We will definitely get a further contraction in the fourth quarter, probably of a similar order," he added. | "This confirms the German economy is in a marked slump," said Klaus Schruefer at SEB. "We will definitely get a further contraction in the fourth quarter, probably of a similar order," he added. |
| Worse to come | Worse to come |
| That pessimistic outlook was echoed by Sebastian Wanke at Dekabank: "There won't be an improvement in the fourth quarter. The situation will only get worse." | That pessimistic outlook was echoed by Sebastian Wanke at Dekabank: "There won't be an improvement in the fourth quarter. The situation will only get worse." |
| Such gloomy predictions are based on the glut of recent indicators showing a slowdown in the German economy. | Such gloomy predictions are based on the glut of recent indicators showing a slowdown in the German economy. |
| Orders for goods produced by the world's largest exporter fell 8% between August and September, according to the economy ministry in Berlin. Orders from outside Europe fell 11.4%, while domestic orders dropped 4.3%. | Orders for goods produced by the world's largest exporter fell 8% between August and September, according to the economy ministry in Berlin. Orders from outside Europe fell 11.4%, while domestic orders dropped 4.3%. |
| BBC Berlin correspondent Steve Rosenberg said: "Even if you make the best cars and the best machine tools in the world, if there's a global recession, customers can't afford them." | BBC Berlin correspondent Steve Rosenberg said: "Even if you make the best cars and the best machine tools in the world, if there's a global recession, customers can't afford them." |
| Last week, official figures also showed that German industrial output fell 3.6% in September compared with August. | Last week, official figures also showed that German industrial output fell 3.6% in September compared with August. |
| "Anecdotal evidence and leading indicators are scary," said Carsten Brzeski at ING Financial Markets. | "Anecdotal evidence and leading indicators are scary," said Carsten Brzeski at ING Financial Markets. |
| The European Central Bank also released its quarterly survey of forecasters on Thursday. It showed a cut in the average 2009 growth outlook to just 0.3%, from the 1.3% forecast in the last survey released in August. | The European Central Bank also released its quarterly survey of forecasters on Thursday. It showed a cut in the average 2009 growth outlook to just 0.3%, from the 1.3% forecast in the last survey released in August. |
| "In the view of the governing council, a number of the downside risks to economic activity identified earlier have materialised," said the report. | "In the view of the governing council, a number of the downside risks to economic activity identified earlier have materialised," said the report. |
| The Paris-based OECD, which represents the interests of 30 developed economies, also forecast a fall in economic activity in the US of 0.9% next year, with Japan contracting by 0.1%. | The Paris-based OECD, which represents the interests of 30 developed economies, also forecast a fall in economic activity in the US of 0.9% next year, with Japan contracting by 0.1%. |
| More startling, it expects the US economy to contract by 2.8% in the fourth quarter of this year. | More startling, it expects the US economy to contract by 2.8% in the fourth quarter of this year. |
| Market reaction | Market reaction |
| The Dax index of leading German shares gained 0.6%, closing at 4,649.52, despite confirmation that Europe's biggest economy is officially in recession. | |
| The Cac-40 in France was also up 0.65%. | |
| The reaction of European markets was encouraging, given the heavy falls in Asian markets overnight. The Nikkei index in Japan closed down 5.3%, while markets in South Korea, Hong Kong and Australia all fell between 3% and 6%. | The reaction of European markets was encouraging, given the heavy falls in Asian markets overnight. The Nikkei index in Japan closed down 5.3%, while markets in South Korea, Hong Kong and Australia all fell between 3% and 6%. |
| The falls were triggered by a sharp drop in the Dow Jones index of 4.7%, following the US Treasury's announcement on Wednesday that it would be focusing on taking stakes in banks rather than buying up their toxic debt. | The falls were triggered by a sharp drop in the Dow Jones index of 4.7%, following the US Treasury's announcement on Wednesday that it would be focusing on taking stakes in banks rather than buying up their toxic debt. |
| Are you in Germany? Have you been affected by the issue in this story? What are your experiences? Send us your comments using the form below | Are you in Germany? Have you been affected by the issue in this story? What are your experiences? Send us your comments using the form below |
| In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below. | In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below. |