The German government is expected to slash its economic forecasts for 2009, reports said Wednesday, citing sources close to the government.
Gross domestic product, or GDP, is expected to decline 6% in 2009, the worst contraction since the World War II. The forecast was cut from a 2.25% fall predicted in January. Economy Minister Karl-Theodor zu Guttenberg will announce the latest set of forecasts at 7.00am ET.
Last week, a group of German economic think tanks jointly lowered their forecast for the biggest Eurozone economy. They now expect Germany to contract 6% in 2009, quicker than a 2.25% fall estimated previously. For 2010, the forecast group does not expect a dramatic recovery. GDP should decline 0.5%. Unemployment was forecast to rise to an average of 3.7 million this year and to 4.7 million next year.
In March, seasonally adjusted unemployed persons in Germany rose 69,000, bigger than 50,000 increased in February.
The International Monetary Fund forecasts the German economy to contract 5.6% in 2009 and 1% in 2010. Meanwhile, the Commmerzbank expects Germany to shrink 6%-7% this year.
On April 27, European Central Bank Governing Council member Axel Weber told German newspaper Franfurter Allgemeine that the German economy is unlikely to grow before the second half of the next year.
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