Not a Fountain of Optimism

Dieter Wermuth, over at one of Die Zeit’s blogs:

Judging from December’s [2008] industrial production numbers, Germany’s social product will have shrunk by 1 percent to 2 percent, real and seasonally adjusted, in the fourth quarter compared with the third. That means that it retreated between 0.6 percent and 1.6 percent compared with the previous year.

To put it more dramatically, or as dramatically as it actually is: Industrial production including construction was in December 12 percent lower than it was a year previous. The crash has been ongoing since September. Extrapolating the fall from August to December to a year’s duration yields a trend of -33.6 percent (104.6/119.9 cubed, as four months are a third of a year) That is a considerably stronger contraction than in the USA (-16 percent) or the UK (-17.6 percent). In a year-on-year comparison, the German contraction is also larger. (My translation, original beneath the fold.)

Much more at the link, but the bottom line is that the crash will hit industry harder than services, and countries oriented toward export more than those oriented toward domestic demand. Germany is a world champion in both.

A decade ago when I worked in financial markets, I knew Dieter as a solid macroeconomist for WestLB. Glad to see he’s been writing for Zeit.


Nach den Zahlen für die Industrieproduktion im Dezember zu urteilen, wird das deutsche Sozialprodukt im 4. Quartal gegenüber dem 3. Quartal real und saisonbereinigt um ein bis zwei Prozent geschrumpft sein. Das bedeutet, dass es im Vorjahresvergleich zwischen 0,6 und 1,6 Prozent zurückgegangen ist.

Um die Sache mal dramatischer darzustellen – oder so dramatisch, wie sie wirklich ist: Die Industrieproduktion einschließlich Bau lag im Dezember um 12,0 Prozent unter ihrem Vorjahreswert. Der Absturz läuft seit September: Wenn man den Rückgang von August bis Dezember auf’s Jahr hochrechnet, ergibt sich eine Verlaufsrate von –33,6% (104,6/119,9 hoch drei, da vier Monate ein Drittel eines Jahres sind). Das ist ein deutlich stärkerer Rückgang als etwa in den USA (-16,0 Prozent) oder in Großbritannien (-17,6 Prozent). Auch im Vorjahresvergleich ist der Rückgang in Deutschland größer.

This entry was posted in A Fistful Of Euros, Economics and demography, Germany by Doug Merrill. Bookmark the permalink.

About Doug Merrill

Freelance journalist based in Tbilisi, following stints in Atlanta, Budapest, Munich, Warsaw and Washington. Worked for a German think tank, discovered it was incompatible with repaying US student loans. Spent two years in financial markets. Bicycled from Vilnius to Tallinn. Climbed highest mountains in two Alpine countries (the easy ones, though). American center-left, with strong yellow dog tendencies. Arrived in the Caucasus two weeks before its latest war.

2 thoughts on “Not a Fountain of Optimism

  1. Yep, well this is what I have been saying for about six months now. I estimate the Q4 quarterly contraction at about 2%, which (multiplied by 4) gives an annualised present contraction rate of 6% per annum. Japan is even worse, estimates are for a 3% quarterly contraction (annual over 10%).

    This is the problem with high median age, export dependent economies, once global demand stalls they fall off a cliff, and the problem will only get worse in the next cycle. This needs a long term structural fix, which means longer term doing something about the birthrate, and short term large scale immigration.

    Otherwise it is just put up, and take it all with a smile. Go down laughing.

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