"Germany slashes 2009 growth forecast
By By Bertrand Benoit in Berlin
Published: April 29 2009 13:01 | Last updated: April 29 2009 13:01
Germany’s economy will shrink by 6 per cent this year, the German government said on Wednesday, suggesting the country would be among the worst-performing large economies in the world in 2009.
The new forecast, down from an expected 2.25 per cent contraction in output, underlines how brutal the impact of the global downturn has been on the German economy, which relied increasingly on exports to fuel growth in recent years.
“We face a confidence crisis,” Karl-Theodor zu Guttenberg, economics minister, said as he unveiled the new figures. “We need to win back this confidence and this requires a clear, sober analysis of the situation.”
The 2009 estimate matches that of the country’s four leading economic institutes, published last week. Yet Berlin is more optimistic about 2010, when it expects the economy to grow by 0.5 per cent against compared to the institutes’ forecast of a 0.5 per cent contraction.
“You had a huge collapse in the global cycle at the beginning of the year and as things normalise, growth should return,” Dirk Schumacher, economist at Goldman Sachs, said. “But the rebalancing now under way will take time and the banks are still in trouble, which argues against a forceful recovery.”
Copyright The Financial Times Limited 2009"