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German economy 'to shrink by 6%' German economy 'to shrink by 6%'
(about 2 hours later)
Germany's economy will shrink by 6% this year and continue to contract in 2010 according to a forecast from the country's leading economic think tanks.Germany's economy will shrink by 6% this year and continue to contract in 2010 according to a forecast from the country's leading economic think tanks.
The estimates, compiled by eight institutes for the German Economy Ministry, also predicts that the rate of unemployment will hit 10% next year.The estimates, compiled by eight institutes for the German Economy Ministry, also predicts that the rate of unemployment will hit 10% next year.
The gloomy forecast chimes with that of the IMF, which shows the German economy contracting by 5.6% this year.The gloomy forecast chimes with that of the IMF, which shows the German economy contracting by 5.6% this year.
This is faster than any other major economy apart from Japan, says the IMF.This is faster than any other major economy apart from Japan, says the IMF.
"The joint forecast of the institutes paints a very dark picture of German economic prospects in the foreseeable future," said Timo Klein at IHS Global Insight.
Severe contractionSevere contraction
The latest twice-yearly forecast shows just how rapidly the outlook for the German economy has deteriorated.The latest twice-yearly forecast shows just how rapidly the outlook for the German economy has deteriorated.
Through 2009 we anticipate a loss of more than 1 million jobs Joint report from German economic think tanks
The think tank's previous forecast predicted economic growth of 0.2% for this year.The think tank's previous forecast predicted economic growth of 0.2% for this year.
The deepening global downturn now means the group sees a severe economic contraction this year and a further shrinkage of 0.5% next year.The deepening global downturn now means the group sees a severe economic contraction this year and a further shrinkage of 0.5% next year.
"For 2010 the institutes expect no drastic rebound," the report said.
The IMF is forecasting a contraction in the German economy of 1% in 2010.The IMF is forecasting a contraction in the German economy of 1% in 2010.
Comments by some of Germany's largest companies confirmed the bleak outlook for the country's economy.Comments by some of Germany's largest companies confirmed the bleak outlook for the country's economy.
"It will probably take five years before demand is back to its pre-crisis level in 2007," said Karl-Thomas Neumann, boss of car parts firm Continental."It will probably take five years before demand is back to its pre-crisis level in 2007," said Karl-Thomas Neumann, boss of car parts firm Continental.
The chief of rival Robert Bosch, Franz Fehrenbach, said: "We expect to see a deep recession until well into 2009."The chief of rival Robert Bosch, Franz Fehrenbach, said: "We expect to see a deep recession until well into 2009."
Job losses
The report for the Economy Ministry also forecasts a fall in exports of 22.6%, compared with its prediction of a rise of 0.1% made just six months ago.The report for the Economy Ministry also forecasts a fall in exports of 22.6%, compared with its prediction of a rise of 0.1% made just six months ago.
Germany is world's largest exporter.Germany is world's largest exporter.
Unemployment, the report says, will hit 10.8% in 2010.Unemployment, the report says, will hit 10.8% in 2010.
"Through 2009 we anticipate a loss of more than 1 million jobs... and in the [autumn] unemployment will be well over the 4 million mark," the think tanks said.
The IMF forecast sees the Japanese economy contracting by 6.2% this year before growing by 0.2% next year.The IMF forecast sees the Japanese economy contracting by 6.2% this year before growing by 0.2% next year.