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  Growing Recession: German Economy Beginning to Suffer

Growing Recession German Economy Beginning to Suffer

The number of indicators pointing to foul economic weather continues growing. A new index released on Friday testifies to increasingly empty order books. Experts predict that over 200,000 jobs are at risk.

The more economic data comes in, the worse the coming recession appears likely to be. According to a key German economic climate index released on Friday, industry in Germany is facing a difficult road ahead. The index, which measures the economic health of producers in Germany as well as the amount of orders they are receiving, dropped unexpectedly sharply in November relative to its already low October level. It now stands at 36.2, much lower than the 40.5 level many had expected, according to a Reuters survey.

Much of that drop comes as a result of a sharp falloff in exports, a branch that had much of the work in keeping the German economy humming in recent years.

The news comes on the heels of Thursday's announcement that the Ifo global business sentiment index dropped to its lowest level in 20 years. The index fell from an October level of 73.4 to November's 60.0.

"We are still at the beginning of an economic downturn that will continue to expand next year and will ultimately take hold in all sectors of the economy," Hans-Werner Sinn, head of the Munich-based Ifo Institute, told the Nürnberger Zeitung.

Economic analysts in Germany now think that the recession, which officially took hold in Germany last week, will ultimately result in the loss of up to 215,000 jobs in the country. Sinn told the Berliner Zeitung that the current economic crisis "could be much more serious worldwide than the economic crisis from 2001 to 2005." He added, though, that he didn't think that German unemployment would climb to its 2005 high of 5 million.

Nevertheless, the effects of the economic plunge, touched off by the global financial crisis that has been raging throughout the autumn, are becoming increasingly apparent. Germany's government, which cast aside its goal of balancing its budget by 2011 earlier this year, agreed late on Thursday that for 2009 it would have to take on almost twice the debt originally planned. Instead of the roughly €10 billion in debt Finance Minister Peer Steinbrück had hoped to take on in 2009, he will now have to borrow €18.5 billion.

Germany, of course, is not alone in feeling the effects of the global downturn. The collective economy of those countries using the euro common currency entered recession last week. The Organization for Economic Cooperation and Development has likewise said that it expects the entire industrialized world to enter recession.

cgh -- with wire reports