Report predicts sharp fall in German output

By George Frey  |   2008-12-11  |     NEWSPAPER EDITION

GERMANY'S economic output will fall sharply in 2009 as the effects of the financial crisis deepen, an economic research group forecast yesterday.

The Rhineland-Westphalia Institute for Economic Research (RWI) said it sees gross domestic product in Germany contracting 2 percent next year. That is 2.7 percentage points lower than the institute's previous forecast for growth of 0.7 percent.

"The reasoning is that the financial crisis is taking a wider toll on the economy than previously anticipated," the Essen-based group said.

"In our estimate, Germany finds itself in a deep recession. Business has weakened markedly in Germany and the world in the last months," it said.

The RWI said exports would be particularly hard hit, as would employment and the federal income. Capital expenditures would fall by an average of 10 percent, particularly for building projects.