Data shows slump in German 2009 economy

Slide in export figures and lack of investment result in shrinking of German economy in 2009.

  
A recent report by the Federal Statistics Office showed that this is the worst period for the economy since the war, and the first time shrinkage has occurred in nearly seven years.

The global financial crisis hit Europe’s biggest economy hardest and the country only managed to claw itself out of recession in April of 2009.

The worst post WW2 performance to date was a nearly 1 percent drop in West Germany's GDP in 1975. A 0.8 percent slide in 1993 was the worst since German reunification.

German economic authorities have forecast a 1.3 percent gain this year, however, recent data suggests it could raise the prediction to 1.6 percent.

Financial experts remained positive regarding the nation’s future economic development.

“The poor performance observed in 2009 will quickly be consigned to the pages of history. We are looking forward to a spirited recovery for Germany’s economy going forward,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in a phone interview.

“Germany will no doubt rise again and be the focal point for the euro zone economy. The country has always been the driving force for growth on the continent, I doubt one bad year will change that situation,” Coleman added.

Government to supervise Bank tie-up

Prime minister will offer oversight as HBOS enter final talks in Lloyds TSB takeover.

A proposed 35 billion pound merger between the two banks, which has the green light from UK authorities will be negotiated by the Prime Minister himself, the BBC has been informed. It will put an end to speculation over the Halifax-Bank of Scotland position after their recent share run.

Although the two sides have yet to comment on the agreement, the developing deal is expected to calm nerves in the industry after the credit crunch last week and further gloomy news regarding employment figures.

Banking crisis

The global economy has been in chaos and one of America’s largest investment banks, Lehman Brothers, filing for bankruptcy protection has not helped matters. Barclays Bank is expected to purchase major assets from the U.S. firm soon.

Following rumours of turmoil at AIG, the U.S. treasury rescued the group with a huge $85 billion bailout, and Merrill Lynch was forced to sell up in a $60 billion deal with Bank of America.

Meanwhile, in Russia, significant stock declines meant trading had to be stopped this week.

Tony Harris, Senior Vice President of Equity Trading at Softbank CIBC International commented on the bank merger in an email to clients, “The merger will come as very welcome news to the government and regulatory watchdogs. The recent run on HBOS shares sparked some panic into the company’s financiers. It would turn into a full scale crisis if they withdrew credit.”

He added, “The fact that PM Gordon Brown is getting intimately involved himself is an indicator of the seriousness of the situation.”

Watchdogs

Dispelling any concerns that competition regulators would interfere in the merger, the government announced that it would “override Office of Fair Trading and Competition Commission powers to see thetie-up to completion”.