Germany appears to be close to the bottom of its economic downturn but it can't expect an instant recovery, Chancellor Angela Merkel said Saturday. Germany, Europe's biggest economy, went into recession last year as the global crisis sapped demand for its exports.
While surveys of business and investor confidence have turned upward recently, forecasts remain gloomy. The country's central bank predicted this month that the economy will shrink by 6.2 percent this year and stagnate in 2010. "The drop in economic output is probably now near the bottom," Merkel said in a speech in Berlin.
However, in a reference to charts of economic performance, she added that "the crisis unfortunately will not be V-shaped," with the low point followed by an immediate recovery. Some expect charts of Germany's output to have "the shape of a bathtub," with the economy stagnating before it starts improving, Merkel added.
"I hope it is a children's bathtub and not a bathtub for people with particularly long legs," she said. Merkel, whose government has put together economic stimulus packages worth some ¤73 billion ($102 billion), faces elections in September. She said her conservative bloc's central aim would be sustainable growth and fair distribution of prosperity. "We will have to run up dramatic debts in the coming years," she said.
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