German Recession Adds to Gloomy Economic Reports
Washington Post
By Howard Schneider
Washington Post Staff Writer
Thursday, November 13, 2008; 7:57 AM

Evidence of a broad global recession continued to accumulate today, with Germany confirming that its economy shrank over the last three months, China reporting a slowdown in industrial output, and the Paris-based Organization for Economic Cooperation and Development projecting a contraction throughout its worldwide membership.

From broad indicators like the demand for oil to the performance of individual companies, the signs all pointed in the same direction: down.

"The OECD area economy appears to have entered recession," the agency said Thursday in a forecast that was stark in its breadth. OECD members include the U.S., Japan, the major European economies and several other nations accounting for the vast bulk of the world's economic activity.

According to the latest forecast, the economies of the entire group currently are contracting, and will shrink by a combined 0.3 percent in 2009. The agency's full-year forecast is for the U.S. economy to fall 0.9 next year; Japan to fall 0.1 percent; and Europe to shrink by 0.5 percent.

"Projections point to a protracted downturn," OECD economics director Jorgen Elmeskov said in a news release today, arguing that the situation may require governments throughout the world to pursue tax cuts, spending programs or other measures to stimulate their economies.

Leaders of the world's top economies are gathering in Washington for a summit this weekend meant to discuss just those sorts of proposals. Though the current crisis began with problems in the financial industry, it has since evolved into a downturn in the nuts and bolts economy.

The OECD report charted an array of statistics among its members that are moving in a uniformly negative direction -- tumbling prices on equity markets, declining home values, plunging car sales and export orders, and rising unemployment.

Those broad trends were reinforced this morning from several directions.

The International Energy Agency slashed its forecast for global oil demand in 2009; China said growth in its industrial output fell to 8.2 percent in October, a more than 25 percent decline from the prior month; Germany reported that its economy shrank by 0.5 percent over the last three months, the second consecutive quarterly decline.

Among bleak corporate profit reports, Wal-Mart did stand out, reporting a roughly 10 percent increase in profit over the last three months. But, in the context of collapsing overall retail sales, that was seen more as a sign of stress among households looking for bargains.

In global equity markets, Asian indexes were down as much a 5 percent, while European exchanges were mixed, with Paris and Germany up slightly and London down around 1 percent.

Original Text