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Merkel defends market stimulus plan

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Merkel defends market stimulus plan

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Germany’s plunge into recession has been confirmed by new economic data. The figures show the economy grew 1.3 percent last year, compared to growth of 2.5 percent and three percent in the preceding years.

The Federal Statistics Office also says it expects fourth-quarter GDP figures to show a drop of 1.5 to two percent in the third quarter. There was added gloom with the news that Germany’s largest bank Deutsche Bank expects to record net losses of 3.9 billion euros for 2008. It comes a day after German Chancellor, Angela Merkel, unveiled a new 50-billion euro stimulus package in an effort to help the economy weather the global storm. Defending her plans to the Bundestag she said: “We have a lot of money in our hands, but we’ve been waiting for the right moment. We deliberately didn’t get involved in trying to outdo each other, at a European level. We really don’t need to be frightened in comparison to other countries.” Europe’s largest economy had already launched a stimulus package in November, but it was widely criticised as being too modest as Germany faces its worst post-war recession. The new spending will go towards credit guarantees for struggling companies, investment in infrastructure projects and schools and tax relief.