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Top Banker Foresees Major German Recession
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Germany’s economy could shrink much more in 2009 than previously expected, a top Deutsche Bank economist predicted.
Deutsche Bank’s chief economist Norbert Walter warned that gross domestic product will shrink up to 4 percent in 2009.
“It’s around a 33 percent chance that that will happen,” he told Germany’s Bild newspaper.
That would represent the worst crisis since the Federal Republic of Germany was founded. The best-case scenario would see GDP shrink 1 percent.
Situation in Russia, Mideast to blame
Walter said the massive drop could be caused by poor economic conditions in Russia and the Middle East.
He recommended that the government lower value-added tax “immediately and for one year” to 16 percent, in order to boost domestic consumer spending.
“Otherwise, there is nothing to stop a major crash,” he told the paper.
Meanwhile, everyday Germans are becoming increasingly worried about a major recession, recent studies show.
Consumers increasingly skeptical
Nearly three quarters of those asked in a study published on Thursday, Dec. 4, were sure that “the worst part of the crisis still lies ahead,” according to the study’s organizers, ARD Deutschlandtrend. That represents a 10 point increase from a month earlier.
Also, half of respondents were worried about their personal future.
The European Central Bank is also pessimistic about 2009. On Thursday, they lowered growth forecasts for this year and next. GDP in the Eurozone is expected to drop 0.5 percent in 2009, European Central Bank Jean Claude Trichet said Thursday, explaining his decision to slash interest rates.
Source: DW-WORLD.DE
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