German December Exports Drop, Deepening Recession

Sandra Fickweil

February 10^th, 2009

3:00 pm

Although Germany is the largest economy in Europe, first signs of recession can already be noticed as sales abroad fell 3.7 % from November according to the Federal Statistics Office in Wiesbaden – another decline of 4 % is predicted by economists.

An increasing number of companies cut jobs as the global financial crisis damps export demand. Deliveries of the Volkswagen AG for example fell 20 %, and the German economy is supposed to contract 2.25 % this year. Imports, trade surplus, and even surplus in the current account decreased.

In 2008 however, the number of export and import increased mainly due to shipments outside of the European Union. According to Dominic Bryant the economy shrinks as much as 3.3 percent this year: “Ultimately, Germany is suffering from an over-reliance on exports and manufacturing,” (Bloomberg) he said.

Bundesbank President Axel Weber said that "as export nation we are strongly feeling the global economic cooling" and "cannot dodge the negative impact of the global financial crisis" (Bloomberg).

However German business and investor confidence rose last month on the expectation that government stimulus programs could help to revive the economy.

Due to the fact that Germany is the largest economy in Europe as mentioned above, it is quite frightening that also this economy is now struggling with the recession. As we have seen in the United States, this is just the beginning of the bad times, which will also have enormous effect on the other European countries in the next couples of years. I have worked at big automobile manufacturer which has never had any problems during tough times in Germany or their exporting countries. However, at the beginning of the year, they stopped production for 1 ½ months due to the decreasing demand and their workers had to stay at home and wait.

Nevertheless, there is at least one very small consolation: even if time is getting worse and more and more layoffs will take place, most workers in Germany are member of unions and companies are required by law to provide social compensation plans for the worst case scenario.

http://www.bloomberg.com/apps/news?pid=20601100&sid=a.caXYOuXiQA&refer=germany