German Economy Enters Worst Recession in 12 Years
European stock markets are panicing today as investors learn that Germany, Europe's largest economy, has officially fallen into recession. In morning trading Britain's FTSE 100 was down about 1.3 percent and the CAC-40 in France and Germany's DAX were both down as well.
The German economy, Europe's largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years.
Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters -- the technical definition of a recession -- in 1996.
German companies are scaling back production as slower global growth erodes export demand. Siemens AG, Europe's largest engineering company, reported a profit decline today and plans to cut 16,750 jobs by 2010. Germany's benchmark DAX Index has tumbled more than 40 percent this year, business confidence fell to a five-year low last month and manufacturing orders plunged in September.