Germany, Europe's largest economy, has now officially plunged into recession as GDP fell by 0.5% in the last quarter, extending a 0.4% drop in the previous one, the German statistical office reported yesterday (13 November).
The last time that the German economy was in recession (defined as two consecutive quarters of negative growth) was the first half of 2003. "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. Economists expect the situation to worsen further in the coming months.
The pace of the downturn in Germany will also drag down Europe's other economies, as Eurostat data to be published today (14 November) is set to show that the 15-country eurozone is also in a technical recession. GDP could decline by as much as 0.3% in the last three months of 2008 after a 0.2% contraction in the second quarter, economists stated.
In 2009, the eurozone will shrink by 0.5%, compared to -0.9% in the US, the OECD forecasted yesterday. As a negative side effect, unemployment is expected to rise significantly.
In Great Britain, unemployment figures have hit their highest level since 1997, as the UK statistical office reported an increase of 140,000 jobless in the last quarter, bringing the total to 1.825 million.
Unemployment figures in Germany are still relatively stable at 3.265 million. Nevertheless, they are expected to rise to 3.3 or even 3.4 million in 2009.
