The worst financial crisis in 80 years has claimed another victim. Germany, Europe’s biggest economy, is the latest country in the region to officially fall into recession.
Gross domestic product contracted by 0.5 percent between July and September.
Germany’s export growth ground to a halt and manufacturing orders slumped.
Adding to the bleak picture, the Organisation for Economic Cooperation and Development has slashed its economic output forecasts for the United States, Japan and the euro zone.
The OECD said all three are in recession in the current quarter and that will continue next year – the US in the worst state, the euro zone next followed by Japan.
Trying to reduce the impact of the economic crisis, the Berlin government is pushing through a stimulus package – everything from tax breaks on new car purchases to credit assistance for businesses.
But pessimism is the order of the day in Germany. Thorsten Polleit of Barclays Capital Germany said: “There are increasing signs that the recession is going to affect us much worse here than we thought just a few months ago. The effects of a worldwide drop in demand are only just now becoming apparent.”
As Germany’s Deputy Economy Minister Walther Otremba put it: “We are going to have to face up to a very difficult and long-lasting economic crisis.”
And as the region’s biggest economy, Germany’s fortunes are crucial to the overall performance of the euro zone.