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German economy could contract by 3.0 percent in 2009

(Agencies)
Updated: 2008-12-16 19:35

BERLIN -- The German economy ministry expects Europe's biggest economy to contract by 3.0 percent or more next year, a press report said on Tuesday.

A woman passes a giant poster for car-maker BMW in Munich, southern Germany on December 11. The German economy ministry has said it expects Europe's biggest economy to contract by 3.0 percent or more next year, a report has said. [Agencies]

The possibility that gross domestic product could fall by 3.0 percent or more, which would mark the biggest recession in Germany's post-war history, "is not unrealistic," the Frankfurter Allegemeine Zeitung quoted an internal ministry document as saying.

At present, the government still officially forecasts 2009 economic growth of 0.2 percent, but will probably revise that figure lower when its next forecast is issued in late January.

Some economists have estimated that activity could contract by as much as 4.0 percent next year.

In the Financial Times Deutschland's Tuesday edition meanwhile, the head of the respected DIW economic forecast institute called for a "forecast pause."

"The crisis is so specific that we cannot grasp it," Klaus Zimmerman said.

"The situation is serious, but we cannot say to what extent."

He feared "self-fulfilling prophesies" which arise from a raft of pessimistic forecasts.

On Monday, Chanceller Angela Merkel's spokesman Ulrich Wilhelm also said that "all economic estimations should be very prudent."

Forecasts are generally based on past crises, but "the current situation has few similarities with experiences in the past," Wilhelm added.