Finance Ministry: German recession getting worse

22nd March 2009, Comments 0 comments

For 2009, the government sees a contraction of 2.25 percent but this is considered too optimistic by most analysts.

Berlin -- Germany's recession is getting worse, the finance ministry warned as a press report said the conglomerate ThyssenKrupp would shed more than 3,000 steel and manufacturing jobs.

"Current economic indicators are on the whole pointing to a further worsening of the situation compared to the fourth quarter," the ministry's monthly report said. "Indicators signal that the contraction of gross domestic product is accelerating in the first quarter... the recession is therefore getting worse in Germany."

Europe's largest economy shrank by 2.1 percent in the last three months of 2008. For 2009, the government sees a further contraction of 2.25 percent but this is considered too optimistic by most analysts.

Sinking global trade has slammed world-leading German exporters, a situation starkly illustrated by a Financial Times report that ThyssenKrupp would get rid of 3,000 jobs.

The group declined to confirm the number but a spokesman told AFP: "It is true that we must cut costs, and we have said we cannot rule out personnel adjustments."

Thomas Schlenz, a supervisory board member that represents ThyssenKrupp workers, said he feared job cuts, but could not put a precise number on them.

"We exclude outright firings," the IG Metall trade union member stressed.

The FT, which did not identify its sources, said it would be the first time a German industrial group has slashed permanent posts because of the recession.

German ceramic specialist Villeroy and Boch said later it would eliminate around 900 posts, or roughly 10 percent of its workforce.

In late January, software giant SAP said it would eliminate more than 3,000 posts, the first such layoffs in its history.

The recession is Germany's worst in six decades and press reports say Berlin will downgrade its economic projections to a contraction of up to five percent when it publishes an updated forecast next month.

Finance Minister Peer Steinbrueck told the Sueddeutsche Zeitung newspaper Thursday there was a "possibility that we will not be able to make the 2.25 percent" contraction currently expected.

The Ifo economic institute estimates the German economy could shrink by more than four percent this year, and business groups appear equally gloomy.

In an interview with mass circulation daily Bild Friday, Peter Keitel, the president of the German employers' federation BDI said: "It is an illusion that we are going to get out of this crisis quickly. We are only at the beginning." The FT said ThyssenKrupp's steel, automotive and ship building divisions would be hit by cuts as the group sought to counter global slumps in those sectors.

Until now, German groups have reduced workers' hours or eliminated temporary posts in an attempt to weather the economic storm.

A rare glimmer of light to pierce the gloom was provided Friday by Siemens, which unveiled a Chinese contract for 100 high-speed trains worth 750 million euros (one billion dollars).

Siemens "has secured five of the last six contracts on the high speed rail market" in China, the Munich-based conglomerate said in a statement.

Richard Carter/AFP/Expatica

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